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Liberia Governance Stakeholder Survey (LGSS) USAID Report 2013, Part 1
See the background
here.
USAID | LIBERIA
FROM THE AMERICAN PEOPLE I A
LIBERIA GOVERNANCE
STAKEHOLDER SURVEY
KEY STUDY REPORT
ENGAGE IQC Task Order 13
IQC Contract No. DFD-l-OO-OB-OOOTO
Task Order No. AlD-669-TO-13-00001
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1 May 2013
This publication was produced for review by the United States Agency for International Development. It was prepared by Chemonics Internationat Inc.
1-1.
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Acknowledgements
The LGSS Team extends thanks to USAlD/Liberia and the US. Embassy in Liberia for providing extensive guidance and assistance during the planning and implementation of the field study. Specifically, we thank Alex Lane, USAID Project Officer, who served as the Contracting Officer’s Representative (COR), and Laura Arntson, Performance Management and Environmental Compliance Advisor, who acted as COR during pa rt of the study. John Ellis, Supervisory Program Officer at USAID, provided key strategic advice and vision to the study team. Ahmed Sirleaf, USAID Collaborating, Learning, and Adapting (CLA) Advisor, provided guidance to the team to ensure that the LGSS was sensitive to realities of the Liberian context. The LGSS Team relied heavily on the analysis and relationships of the USAID Economic Growth, Health, Education, and the Democracy and Governance teams. Christian De Angelis, Elizabeth Wewerka, and Jenkins Vangehn from the Economic and Political section of the U5. Embassy provided valuable background on trends and issues in multiple sectors. Without the input of these teams, the assessment would not have been possible.
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CONTENTS
Executive
Section I: Introduction and Approach
Section II: Country-Level
A. B. C. D. Drivers of
Section III; Problem-Driven
A. B. C. Concessions D. Auditing/Accounting
A. Desk Study B. 0. Sample Interview Questions D. Task OrderScope
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Executive Summary
The Liberia Governance Stakeholder Survey (LGSS) Report presents the results of a study conducted from December 2012 to May 2013 by Chemonics International, under contract with the US. Agency for International Development (USAID) Mission in Liberia (USAID/Liberia). The study's purpose was to analyze the political economy of the payroll, land, concessions, and auditing/accounting sectors in Liberia to provide actionable recommendations and advice as a basis for strategic planning to achieve further good governance reforms in Liberia.
Methodology
To carry out the study, a nine-member Liberian and American research team first adapted political economy assessment (PEA) methodologies used by other international donors, including the European Union, the United Kingdom Department for International Development (DFID), and the World Bank.
The LGSS Study Team then conducted an initial literature review of existing documents about the Liberian context in Washington from December 11, 2012 to January 28, 2012. Next, it carried out extensive qualitative research interviews with more than 100 people in Liberia from January 30 to March 7, 2013. The team corroborated interview data through a process of triangulation and analyzed it using the series of analytical lenses prescribed by the political economy assessment methodology as described in the body of the report.
Coun try-Level Analysis
Consistent with the established methodologies, the LGSS Report first identifies and describes country-level structures, institutions, agents, and drivers of change and how they affect Liberia’s overall political economy:
0 Significant country—level structures that define the modern political economy in Liberia include the vestiges of colonialism, a pervasive rural vs. urban and formal vs. informal dynamic, the youth bulge, poor economic conditions, crumbling infrastructure, and an abundance of natural resources. Structures are defined as somewhat permanent contextual conditions that are difficult to change and have a significant impact on the political economy of a country.
0 Likewise, as part of the country-level analysis, the LGSS Report states that both informal and
formal macro-level institutions play a major role in Liberia’s political economy. Some informal institutions are particularly influential: a culture of impunity, political patronage, and family ties, ethnicity and religion, gender, and corruption. At the same time, formal institutions, or the lack thereof, play a key role, enabling informal institutions to thrive. These include a strong executive enabled by a lack of checks and balances, weak enforcement and regulatory bodies, ineffective rule of law institutions, poor systems of accountability, an incomplete legal framework, and unimplemented laws.
I The LGSS Report characterizes the strengths and weaknesses of internal and external agents in Liberia. Agents are important because they are the actors that directly impact the political economy of Liberia. They can be either individuals or categories of individuals. lnternal agents like political leaders and political parties and tribal and secret society leaders are particularly important, whereas others, including professional and business organizations, civil society organizations, and community-based organizations, are not as influential as they could be. Some external agents are highly influential in the four sectors analyzed in Liberia, such as bilateral donors, multilateral development banks, international organizations, and multinational
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companies, including concessionaires. Regional organizations have less impact on the four sectors.
0 We refer to these factors, as they come together in their totality to foment or impede change in
Liberia, as “drivers of change” in country-level analysis. Major drivers of change in Liberia include urban elites, international donors, the President and her close advisors, government officials who act with impunity, the remnants of war, and traditional leaders.
Sector and Problem Analysis
Next, the LGSS Report uses sector- and problem-based analysis to examine each of the four sectors in detail, including a detailed description of the problem in each. Each sector is characterized by a set of unique institutional governance arrangements and capacities, made up of policies, institutions, and public administration and policy processes. Against that backdrop, each sector has its own political economy drivers, which include stakeholder incentives, interests, and influence, as well as economics and power relationships that enable some stakeholders to distribute and receive rents and resources and have veto power over reforms. These are all tied back to the country-level analysis and affected by social and historical factors, corruption, gender, and islands of integrity, which are positive forces with which USAID could work as a foundation for future programming to bring about change. Out of them, specific patterns of behavior emerge, which the report describes in some detail. Finally, within the context of the political economy, the report makes recommendations on actions that USAID and international donors can take to bring about lasting change in each sector. The major findings resulting from that analysis are summarized below.
Payroll
The Government of Liberia (GOL) loses tens of millions of dollars each year because payroll resources are diverted away from their intended purpose. Historically, payroll reform has been slow to take root in Liberia, despite some successful and well-intended reform efforts, because many people at all levels of government
Government payroll in Liberia is
dominated by syndicates of
corruption that operate at all
levels of the public administration.
benefit from current weaknesses in the present system. The result is entrenched, syndicate-like practices of bureaucratic corruption that are both systemic and organized. Some high—level political will exists to fundamentally reform the system, but officials at the highest levels, as well as lower and mid-level officials, may stand in the way through attempted legal or legislative action, protests, or passive resistance because they receive illicit enrichment from the current system For that reason, a strategic approach is necessary if and when a payroll reform effort is carried out. Such an effort could involve the following basic steps:
- Establish a Task Force to monitor and guide payroll reform, including the Minister of Finance
(MOF), Civil Service Agency (CSA) Director, and donors. The task force should place expatriate advisors into the MOF and CSA to provide monitoring and technical assistance as reforms are adopted.
0 Conduct a rapid study of who is on government payrolls and how much each person is being paid
through the different payrolls that exist.
- Improve internal controls to prevent personnel from being added to the payroll inappropriately.
e Establish and implement an adjudication process so that complaints from those who believe they
have been unfairly removed from the payroll can be heard and acted on fairly.
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Elevate the CSA to a Commission to give it considerably more stature and clout than it presently has as an agency.
Develop and implement a system of position grading and classification, consistent with international best practices in merit-based civil service systems.
Formally place individuals into the new position grading and classification system.
Calculate a "cash out" (a one-time bonus) paid to government employees as they join the new system, to give them an incentive to join it, while reducing the potential for economic shocks. Formally pay the "cash out,” as described above.
Produce and roil out a communication campaign that conveys the nature of reforms to government employees and the public at large to build support for these reforms.
Conduct periodic audits of the process.
Establish a principal administrative officer in each ministry or agency to improve adherence to payroll rules and improve stability within the bureaucracy even when political leadership changes. Adopt time and attendance mechanisms, such as timesheets, to capture who is really working, where, and on what.
Increase usage of direct deposits and mobile money.
Establish and roll out a performance and grading system to link pay Increases to performance. Establish a feedback loop to address and troubleshoot problems as they arise.
Land
Competing claims for land have been a driver of conflict in Liberia and, at the same time, hinder economic development. Significant political will exists to reform the land sector in Liberia and improve the historically problematic dual system of formal and traditional tenure that marginalizes rural communities, is prone to corruption, and is characterized by information management and documentation challenges. The Land Rights Policy Statement draft provides a forward-looking vision for such overarching reforms in the sector. However, flashpoints and obstacles will arise as the recommendations of the Land Rights Policy Statement draft are formally adopted and implemented as laws, regulations, and systems. For example, many elites may question the recognition of traditional tenure rights, while rural indigenous populations are likely to engage in disputes about boundaries between private tracts of land, communities themselves, or political jurisdictions.
Likewise, additional hurdles may emerge as the GOL attempts to form a land ministry or agency, consistent with the President’s recently announced policy initiative to do so. However, this report concludes that this reform effort ultimately will move forward because the interests that favor it are more powerful than those that oppose it. Questions remain about what entities and functions will comprise the new land ministry or agency.
There is a path for future reforms in
the land sector in Liberia, and
USAID is well-positioned to support
that effort.
This report concludes that USAID is well-positioned to support both land reform and the establishment of a land ministry or agency and provides examples of how USAID can support these processes. USAID can help address the aforementioned flashpoints, support adoption of the Land Rights Policy Draft into the legal framework, and strengthen dispute resolution mechanisms. At the same time, USAID also can provide assistance to the legislative process to ensure that the law establishing the land ministry or agency is established in accordance with international best practices.
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Concessions
Natural resources could be the engine that drives growth and development in Liberia, but the process of granting private companies the right to extract or manage these resources is controlled from the top and alienates the millions of individuals who live at the bottom of society. The process of awarding concessions is opaque, does not follow Liberian law, and does not adequately address the concerns of local communities or the nation as a whole. Private interests capture the state by engaging high—level, decision—making elites to slant the rules of the game in their favor in the name of rapidly promoting direct foreign investment. These elites often receive personal financial gain from the award and management of concessions. Neither government nor citizens receive the full benefits to which they should be entitled from the current concessions regime. Poor information management and dissemination approaches exacerbate these problems.
At present, there is not sufficient political will at high levels in Liberia to fundamentally reform how concessions are awarded or monitored, because the decision-making elites benefit so much from the current arrangement. For example, two separate institutions —the Public Procurement and Concessions
Commission (PPCC) and the National Bureau of Concessions
(NBOC) — are legally mandated to monitor and regulate the
award and management of concessions, yet neither can function properly because they are drastically underfunded and underresourced.
Currently there is little appetite
among high—level elites to
fundamentally change the manner
in which concessions are awarded
and managed in Liberia‘
USAID can lay the groundwork for future reform in the concessions sector by engaging in a policy dialogue with the government and supporting nascent efforts to improve information management and empower citizens. Examples include supporting the development of an concessions cadastre, strengthening the NBOC and other agencies, helping local communities to explore legal remedies, and engaging civil society.
Auditing/Accounting
The international donor community is concerned about recent changes to the legal framework through the Liberian Institute of Certified Public Accountants (LICPA) Act, which, in effect, restricts the auditing and accounting profession to a handful of Liberian firms by preventing foreign auditing and accounting firms from operating in Liberia unless they are "residents" or agree to share 35 percent of their revenues and fees with Liberian firms. Although the firms comprising LICPA receive considerable financial benefit from the law, they do not yet have the capacity to carry out auditing and accounting efforts for international donors operating in Liberia. For example, the weak skills and lack of experience at these firms could impede implementation of the USAID Forward agenda, which seeks to provide financial resources directly to host-country entities and asks them to manage those resources with their own systems to the greatest extent possible.
Auditing and accounting laws help
to create a ca hat of Liberian firms, a
condition which is unlikely to
change in the foreseeable future;
USAID can find ways to work within
the current framework.
The LGSS Study indicates that there is not the political will or the incentive to amend or repeal the LICPA Act at the present time. Rather than making efforts to reform the sector, USAID can take a phased approach to working within the current policy framework. In the short to medium term, USAID can access the robust audit and accounting services skills it needs to achieve its Forward objectives by (1) encouraging joint ventures between Liberian and foreign firms in tenders; and (2) collaborating with the Government
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Auditing Commission (GAC) to bring in international auditors, because the GAC is not subject to the provisions of the LICPA Act. in the longer term, USAID can seek to build the capacity of the audit and accounting sector through technical assistance and training.
Cross-Sector Findings
There are several similarities in the political economy of seemingly disparate sectors. Each is controlled by a handful of powerful decision-making urban elites. Often, these elites act without fully considering the impact of their decisions on the nation as a whole or on other elements of the populace, particularly urban indigenous populations. These elites often benefit personally from their decisions.
All four sectors were damaged during the wars, and it will take decades to restore them, even with the help of the international community. Liberia is a long way from achieving international best practices in any of the four sectors and, at present, strives for basic functionality.
Payroll and concessions are going to be particularly difficult sectors in which to bring about reforms, yet there are some openings that suggest that changes are possible. Reform appears more likely in the payroll than the concessions sector as high-level elites have spoken out in favor of payroll reform but similar statements have not been made about concessions reforms. While a clear path for reform is not yet evident in either sector, this report details the steps necessary to carry out overarching payroll reform and makes general recommendations about next steps in the concessions sector.
0n the other hand, in the land sector, a clear path for reform has emerged. While it appears that this path will ultimately be followed, it remains potentially rocky. Successful reform will require significant GOL and donor investment over decades.
In sharp contrast, chances for overarching reform in the auditing and accounting sectors are slim. No clear path for reform has been defined, and even if it had it is highly unlikely that anyone would pursue reform. Decision-making elites have succeeded in tilting the playing field in their favor and have no incentive to allow reforms that would jeopardize the benefits they deriving from the current system.
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I. Introduction and Approach
This section describes the purpose of the study, the approach and methodology the LGSS Study Team followed to carry it out, and the design of the study, including details about the pre-departure literature review, data collection methods, data analysis methods, and the composition of the LGSS Study Team.
A. Purpose of the Study
The purpose of the LGSS is to: (1) conduct political economy analysis of four key sectors in Liberia: government payroll, concessions, land, and auditing/accounting and (2) provide actionable recommendations and advice as a basis for strategic planning to achieve further good governance reforms in Liberia. Consistent with direction provided by USAID, the LGSS Team focused the following level of effort on each sector: 40 percent on payroll, 25 percent on land tenure, 20 percent on concessions, and 15 percent on auditing/accounting.
B. Approach
This section describes the approach that the LGSS Team followed - which comprises a methodology and study design, including a literature review and visit preparation, data collection, analysis — and the team’s composition and roles.
1. Methodology
Because USAID has not yet developed agency-wide guidance for the conduct of political economy analysis (PEA), the LGSS analyzed the political economy assessment methodologies used by the World Bank, the European Union, and the United Kingdom Department for International Development (DFIDF’ and developed a hybrid methodology drawing on each model's strongest and most relevant elements. This three-tiered methodology relies on country-level analysis, sector-based analysis, and problem-driven analysis to describe the political economy of a specific issue or set of issues. The overall goal is not to examine governance problems and solutions from a technical point of view but to consider the political and economic underpinnings of those problems and potential political and economic feasibility of any proposed solutions. Further details of the methodology can be found in the LGSS work plan.
2. Study design
The LGSS Team carried out the study with USAID from December 11, 2012, to May 10, 2013, through a two-phased approach, as described below.
a. Literature Review and Pre-Field Preparation
The methodology first called for the LGSS Team to carry out a thorough literature review to develop an
overall understanding of the country context and the basic dynamics in each sector. Before mobilizing to the field, the team conducted the literature review in Washington from December 11, 2012, until January
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28, 2013. In this review, the team (1) conducted a desk study of relevant documents, listed in Attachment A; (2) established a preliminary list of individuals (see Attachment B) that it would seek to meet with during the field work, which was refined with USAiD, the U5. Embassy, and the field team during the field work; (3) developed research questions in collaboration with USAlD (see Attachment C); and (4) defined the problem in each sector (definitions are included in the discussion of each sector in Section ill of this document, titled “Problem Driven Analysis”).
b. Data Collection and Analysis
LGSS Field Team members conducted field work from January 30 to March 7, 2013. The LGSS Team used structured key informant interviews to collect data by posing the research questions cited above to the individuals listed in Attachment B. The field team identified additional interviewees on an ongoing basis throughout the assessment process. Selection criteria for key informants included (1) demonstrated knowledge of the sector, (2) up—to—date/recent experience with the sector, (3) willingness to discuss issues frankly, and {4) potential for contribution to a well-rounded, objective understanding of the sector. The team interviewed more than 118 individuals from government, civil society, the private sector, and donor community, ranging from senior leaders and influential political appointees to "street-level” managers within the public administration. The Field Team explained the study’s purpose to each interviewee, asked a similar set of questions to interviewees in each sector, followed up and probed without directing answers to the greatest extent possible, and took detailed notes. The Field Team actively sought to identify female key informants in each sector, which proved difficult, because women are underrepresented at the management level in Liberia, and most interviewees held fairly senior positions. In total, about 19 percent of those interviewed are female, which exceeds the composition of the urban labor force in Liberia in which only about 11 percent of managers are female.4
The Field Team verified the data gathered in the interviews through a process of triangulation. A similar set of questions was given to multiple stakeholders likely to have differing points of view (e.g., a GOL ministry, a private company that the ministry regulates, and universities/nongovernmental entities that observe or oversee those processes). When analyzing the responses, patterns emerged, allowing the field team to reach conclusions about governance conditions, the underlying dynamics, and what can be done to improve both, as we document below. All proposed solutions focus on what is feasible, given Liberia's political circumstances, available funding, and capacity constraints. Where data could not be triangulated 0r patterns did not emerge, the key study report document notes that differing opinions existed among interviewees. To the greatest extent possible, the Field Team did not reach conclusions unless they could be supported by triangulation or stated patterns of behavior noted by multiple interviewees. The Field Team did not identify information gaps in any of the sectors significant enough to comprise the integrity of the analysis.
0. Team Composition and Roles
The LGSS Team’s leadership stressed having Liberians fill as many key roles as possible to reduce learning
curves and draw on in-country knowledge as much as possible. Six of the field team’s nine members were Liberians.
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The members of the field team were Michael Geertson, Expatriate Team Leader; Katelyn Baldwin, Expatriate Chemonics Liberia Representative; Elizabeth Martin, Expatriate Washington-based Project Director and Field Training Lead; Fatu Gbedema, Liberian Political and Cultural Expert; James Thompson, Liberian Payroll Specialist; Mahamed Boakai, Liberian Auditing and Accounting Specialist; Ali Kaba, Liberian Land Tenure Specialist; Thomas Nah, Liberian Concessions Specialist; and Jackson Dunor, Liberian Logistics Specialist. In addition, Joseph Urban and Denise St. Peter, expatriates, provided research, administrative, and logistics support from Washington. Emily Elliott, another expatriate from Chemonics, interviewed several individuals working in the accounting and auditing profession in Ghana who had knowledge of the accounting and auditing sector in Liberia.
Generally speaking, the team reached consensus on its understanding of issues analyzed in the study by discussing them in small’group settings facilitated by the Team Leader, incorporating those points ofview in the key study report draft, and then reviewing iterations of the draft. This process also helped to ensure the report’s objectivity.
The analysis and report also benefited from multiple rounds of review and feedback with the USAID team‘ There was no significant divergence of opinions between USAID and the Field Team, nor did the team feel that USAID’s input compromised the report’s objectivity.
ll. Country-Level Analysis
Liberia is at a crossroads. On one hand, Liberia’s accomplishments are remarkable, and the future looks bright. Two civil wars [1989-1996 and 1999-2003) are over, and the country has enjoyed relative peace and stability for nearly a decade. Charles Taylor, the Liberian strongman at the heart of both wars, is imprisoned in The Hague, as he awaits a 50-year prison sentence in the United Kingdom. The Liberian economy has grown at about 6.6 percent per yearfor the last seven years. The country is rich with natural resources that could fuel development for decades to come. Two peaceful civilian transfers of power have occurred, and President Ellen Johnson Sirleaf has made commitments to good governance reforms, attracting the support of international donors and investments from foreign companies looking to do business in a stable operating environment. Liberia has embarked on several initiatives designed to promote development so that the country does not backslide into conflict, including the Agenda for Transformation, a development framework, and Vision 2030, a plan to achieve middle income status over the long term.
Despite this progress, significant challenges remain. Economic conditions are poor; 8 of 10 Liberians survive on less than a dollar per day. Liberia’s infrastructure is in ruins. The institutions of governance have not yet matured enough to allocate resources fairly and mitigate differences. A culture of impunity that already existed before two civil wars was, in some ways, worsened by the conflict, which destroyed the social and moral fabric of certain aspects of society and fundamentally altered notions of right and wrong. Many of the issues that drove the country into violence remain just below the surface, waiting to bubble up when the right combination of factors align. Urban elites privileged by colonial circumstance continue to control nearly all aspects of political and economic decision-making, excluding the mostly uneducated, rural indigenous population from economic and political power. lfthis exclusion is not addressed, the potential for renewed conflict remains high, jeopardizing the progress that has been made. Because so many powerful interests benefit from the current situation — mainly powerful urban elites — there is often little incentive for change. These issues are addressed in more detail in the sections that follow; specific examples are given in the sections ofthe report addressing the political economy of the four sectors.
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A. Structures
Liberia’s political economy cannot be understood without explaining the structures that underlie it. For the purpose of this analysis, structures are defined as somewhat permanent contextual conditions that are difficult to change and have a significant impact on the political economy of a country.
1. Colonial Antecedents Impacting the Present-Day Political Economy
Liberia was never colonized by a European power. In the 1820s, freed American slaves, known today as Americo-Liberians, returned "home" to Africa to establish what is known today as Liberia. They were soon joined by slaves freed from the Caribbean. For the decades that followed, individuals referred to somewhat derisively as "Congo People” also joined the freed slaves from America and the Caribbean in Liberia. Congo People were slaves recovered by American and British navies in the Atlantic following the abolition of slavery and "returned" to Liberia, regardless of where they originated, and since most were from Central Africa, thus the name Congo People. All three groupsjoined a population of indigenous Liberians and helped to establish a colony which gained independence in 1847.
Samuel Doe seized power in 1980 and installed an indigenous-led regime that ruled until 1989. Prior to Doe, the descendents of Americo-Liberians and freed slaves from the Caribbean (known collectively as "settlers" in Liberian parlance) essentially ran all aspects of the government, business, education, and resource allocation, all of which were centered in Monrovia. Indigenous Liberians were denied access to formal education until shortly before Doe came to power. The vast majority of indigenous Liberia ns were left on the outside looking into that system and were not even allowed to travel to Monrovia without special permission. However, some settlers adopted indigenous Liberians and educated them, allowing them to become "Kwi"— as Liberians called it - or "civilized" into Monrovian society. While the current president, Ellen Johnson Sirleaf, does not consider herself Americo-Liberian, her father was raised in such an arrangement, known colloquially by some leerians as the "ward system.”
The descendants of Americo-Liberians, freed slaves from the Caribbean, Congo People, and those "adopted" into this group thorugh the ward system, have traditionally comprised the “elite” in Liberia. In the present day, the lines between these groups have become blurred, with some Liberians referring to those elites as Americo-Liberians, Congo People, or Kwi, regardless of where their ancestors originated. For the purposes of this report, the elite also includes some indigenous Liberians who have become educated and enjoy elite status, even without the help of the ward system, as well as many who married into such circles. During the wars, tens of thousands of elites fled to Europe and the United States,- a few stayed behind, many of whom held high-level positions in the Doe and Taylor regimes. Now that the wars are over, hundreds of elite have returned to Liberia, many at the president’s personal request, after decades spent overseas. Together with the handful that never left Liberia, they bring skills and education that most indigenous Liberians lack. in total, these elites comprise less than 10 percent of Liberia’s current population, but many interviewees suggested that they still control the present-day system of governance in Liberia, much as they did for the 150 years before the wars.
The cleavage between the elite and other Liberians and its impact on the four sectors examined by LGSS are tangible. For example, elites fill the vast majority of powerful and lucrative ministerial, deputy ministerial, and director positions in the ministries and agencies that we visited. Many others serve in the senior leadership of public corporations, like the National Port Authority or the National Oil Company of Liberia (NOCAL). In turn, these officials award a large number of lower level positions to their friends and relatives, who often are members of the same elites. Likewise, the Senior Executive Service (SES) places diaspora, mostly from the United States and who are willing to return, into highly compensated, senior
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level positions. Although the experiences and skills of people from the diaspora are necessary to run the country, appointing them to high-level positions often further alienates indigenous populations.
Many interviewees suggested that the drastic socioeconomic disparities between settlers and indigenous Liberians will result in inequitable patterns of growth and development. In the past, this phenomenon has been a driver of conflict. It will remain a threat to stability and prosperity in the future, if redistributive policies enacted by the GOL cannot level the playing field between the “haves” and "have-nots.”
2. Urban vs. Rural and Formal vs. Informal Structures
The power structure controlled by the elites is urban in nature. Nearly all members of these elites live in and around Monrovia or other cities and towns like Buchanan, Gbarnga, Ganta, or Kakata. The rural countryside, on the other hand, is populated almost completely by indigenous Liberians, with few exceptions. Both the elite and indigenous Liberians often refer to those who live outside Monrovia or other cities and towns as "country people,” with the implication that they are inferior to those who live in more urban settings.
Generally speaking, elite Liberians are part of a formal economy, education system, and justice system that are codified in a set of laws with corresponding institutions. On the other hand, indigenous Liberians often are not part ofthe formal economy, attend both formal schools and informal "bush schools,” and have their disputes settled by a system of paramount and clan chiefs. In some rural communities, less than 10 percent of the population can read or write their names.
The end result is that many Liberians — mostly indigenous ones - are marginalized from public-sector decision-making processes and negatively affected by decisions made by the elite, who often do not visit the countryside or understand its needs This is facilitated by inherent weaknesses and unequal distribution of power and resources in Liberian policy-making and public administration. Many interviewees pointed out that this dynamic can be seen clearly in the land and concessions sectors. Here, indigenous Liberia ns frequently lose access to the places where they live and make their livelihoods
because of concessions agreements negotiated by the elite. Likewise, land laws developed by urban elites decades ago only allow "civilized Africans" (i.e., settlers) to own property. As a result, the vast majority of rural Liberians do not actually own land and, instead, have access to public lands based on a tenuous form of customary tenure._ This affects women in particular, as they often take a backseat to their male siblings when land or estates are passed from generation to generation. To a lesser extent, the dynamic also affects the payroll and auditing/accounting sector, as many indigenous Liberians are essentially locked out of government jobs and professional opportunities as auditors and accountants, since elites control both aspects of governance.
3. The Youth Bulge, Low Capacity, and Few Opportunities
Liberia has a huge population of young people; they have very limited capacity, and their futures look bleak. Liberia has the third fastest growing population in the world; 49 percent of Liberians are under the age of 15. Liberians born between 1989 and 2003 are part ofa so—called “lost generation,” whose education was interrupted or limited because of the war. More than 10,000 were child soldiers, few of whom received adequate psycho-social rehabilitation support. Some youth manage to make ends meet as pem-pem (motor-bike taxi) drivers, but overall they have few long-term income-generating prospects. Drugs and alcohol are cheap, and some interviewees suggested that hard drug use is on the rise. Nobody knows precisely what the youth unemployment rate is, but many suggest it is more than 70 percent and even higher in rural communities. Youth are easily incited to violence by elder political and tribal leaders.
Ill
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Interviewees consistently told us that most recent graduates of Liberian universities, including law and professional schools, cannot communicate effectively in written English, and so are unable to compete against those educated before the wars for the limited number of government jobs. Furthermore, they may see the civil service as a way to make ends meet, but it is not a promising career path. Many of the best and brightest have already left Liberia to pursue careers in the United States.
Within that context, if Liberia’s youth do not see the dividends of peace and gain equal opportunity, they may become a key driver of conflict that takes Liberia back to its violent past. Likewise, if youth remain marginalized outside the formal political arena because they lack education and voice, then it is increasingly likely that Liberia's future leaders will be chosen by force and not the ballot box. Although youth are not necessarily homogenous in their wants and needs, the people we interviewed consistently suggested that in addition to responsiveness from their political leaders, youth want access to education and skills training, economic opportunities like jobs and entrepreneurship, and basic public services, such as health, water, and electricity.
4. Poor Economic Conditions
The wars had a remarkable impact on the economy. Once on par with countries that are now considered middle income, Liberia lost 90 percent of its annual GDP between 1989 and 1995. Although the country has returned to single-digit annual GDP growth, reaching the GOL's goal of becoming a middle-income country by 2030, called Vision 2030, remains a daunting taslc The urgency of improving the economy has ramifications for public administration and policy decisions. For example, the government rushes decisions about awarding concessions to companies without fully considering the impact on the environment or local communities. Likewise, the government often cites the potential negative economic impacts of payroll reform as one ofthe reasons for not embarking on reform efforts. The war has affected how Liberians view future personal economic circumstances: they are much more likely to worry about immediate economic gain than long-term issues like sustainability of a particular income stream, savings, or retirement.
5. Crumbling Infrastructure
Intentionally damaged by combatants and neglected for decades, the poor quality of basic infrastructure in Liberia hampers the country’s development. Fewer than 1 percent of Liberians have access to the electrical grid.5 Mobile phone usage however, is increasing exponentially. More than 40 percent of Liberians now use mobile phones, but mostly in urban areas, even though spotty coverage is available in all counties.6 The poor infrastructure exacerbates the urban-rural dynamic described previously; during the rainy season, travel to outlying rural areas is virtually impossible because roads are washed out. This hinders the government's ability to root out corruption, for example, by visiting government schools to monitor activities or determine if workers are real or “ghosts.” Many technological solutions to governance that would be commonplace in other countries, such as databases or electronic transactions, are not viable in Liberia because there is no access to electricity or the Internet. In the few government ministries that have computers, many of the computers have been destroyed by power surges or rendered inoperable by viruses, because virus software has not been updated.
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6. Natural Resources
Natural resources are also an important structure in Liberia. The table below briefly describes the key natural resources present in Liberia, the companies working to extract them, and some brief characteristics of each resource. The GOL estimates that it has signed concession agreements in these sectors that will result in $19 billion in foreign direct investment (FDI).
Table 1: Key Natural Resources, Companies Extracting Them, and Characteristics of Resources
Resource | Key Private Sector Players Resource Characteristics
Rubber | Firestone, 1 Rubber is Liberia’s most important export commodity.
Liberian Agricultural Firestone is the world’s largest rubber plantation, Company, accounting for around 60 percent of rubber exports in Guthrie (Goodrich’s l Liberia. Around 20,000 people are employed by commercial plantation), LlBCO/Cocopa l rubber farms, and 60,000 as smallholder households Rubber Company, Salala l growing rubber trees. Liberia exports raw rubber (low Rubber Corporation I value), because it has no secondary or tertiary rubberprocessing capabilities. Palm Oil | Golden Veroleum, Sime l Palm oil is the most widely traded tropical vegetable oil in Darby l the world in terms of production value. Liberia has a near
perfect climate for growing palm trees. About 6 percent of Liberia's land has been granted to palm oil companies. Timber | Atlantic Resources and l With more than 40 percent of the remaining Upper
1 | Alpha Logging (divisions of l Guinean Forest within its boundaries, Liberia is rich in
I a Malaysian company i timber resources, including sought after hardwoods that
called Samling) i can be used for a variety of commercial purposes and are in high demand in Asia. Loggers have obtained access to more than 25 percent of Liberia’s forest. iron ore | ArcelorMittal, i Iron ore is the driving force behind the extractive industries
China Union, i boom in Liberia. In the 19605, mining of iron ore replaced BHP Billiton, i production of rubber as the biggest industry. Before the African Aura Mining i war, Liberia was the world's third-iargest producer of iron Elenilto, Sesa Goa (Western l ore globally and is now 11th, because the land is rich with Cluster) l iron and aluminum. IMF predicts value of iron exports to
overtake those of rubber in 2013.
Gold and I Narhex Life Sciences, l Diamonds and gold are mined on a smaller scale than iron Diamonds I Hummingbird, Aureus l ore. Both are viewed as potential growth areas for Liberia, Mining, Ducor Minerals l but companies are not mining either mineral at high levels AMLIB United Mineral, l at present. African Aura
Petroleum | Chevron, African l Significant offshore deposits are believed to exist. The GOL (Oil & Gas) | Petroleum, Anadardko, [ has designated 30 blocks and issuing licenses. Significant
Exxon, Peppercoast
extraction has not yet begun.
B. Institutions
This section briefly describes the macro-level institutions that affect Liberia's political economy, including both informal and formal elements, and provides a few salient examples. Section III of the report
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discusses how lower level institutions specifically affect each of the studies' four sectors in greater detail and suggests ways that USAID can collaborate with those organizations to bring about much-needed reforms.
1. informal
There are several informal institutions that affect political economy in Liberia. By categorizing them as “informal” through the PEA methodology, the LGSS Study Team means that they are not included in the constitution or codified in law, as are the formal institutions discussed in Section 2 below. We do not necessarily suggest that informal institutions have to be part of traditional, customary, or tribal systems. Rather, informal institutions are defined in the LGSS Report as political, cultural, and social norms that are not as structural or permanent as those described previously in Section A.
a. The Culture of lmpunity
For several reasons, Liberia has a culture of impunity. As discussed earlier, the nature of the urban eliterural indigenous dynamic had a prof0und impact on Liberian society. Elites were “above the law" and went unpunished for egregious or criminal behavior. Their very existence was based on using their position of privilege to exploit seemingly public or common resources for their own personal ends.
Patterns of behaviors that emerged during the wars further eroded norms about right and wrong and removed any notion that there are repercussions for illegal or unethical behavior. Western democratic concepts like "conflict of interest” and “accountability” have yet to take root in the consciousness of the average Liberian civil servant. Events since the wars have only reconfirmed that notion, since many of the leaders in Liberia’s tumultuous past have gone entirely unpunished because of both a lack of political will and capacity. For example, the Liberian Truth and Reconciliation Commission constituted in 2006 to document acts of wrongdoing after the war and bring to justice perpetrators that killed more than 300,000 people, recommended prosecution for more than 100 individuals. To date, the government has not a brought a single prosecutorial action against any ofthem.
Likewise, many interviewees recounted how, as young children, they watched Samuel Doe rise to power by assassinating President William Tolbert and conducting the public execution and torture of dozens of high-level government officials on the beaches and streets of Monrovia. Nobody could stop him for nearly a decade. Similarly, other interviewees noted that Charles Taylor was convicted of war crimes in the UNmandated Special Court for Sierra Leone in The Hague for actions carried out in Sierra Leone, not for the numerous weil-documented and self-admitted atrocities that he committed on Liberian soil. And even if
he was convicted, it might not matter to the average rural Liberian. He was, after all, elected under the slogan: "He killed my ma, he killed my pa, but I’ll vote for him," and some interviewees suggested that he would be the most popular political figure in Liberia if he returned tomorrow.
The example of Prince Yormie Johnson is equally troubling. in 1989, he tortured and executed Doe by cutting off his ears while calmly drinking a Budweiser. The gory event was captured on film and is widely distributed in Liberia; yet, Johnson is a democratically elected Senator from Nimba County and has never been prosecuted. In the last Presidential election, he came in third.
This culture of impunity extends to much lower and mundane levels, directly affecting the four sector areas included in the LGSS. For example, in 2012, the General Auditing Commission (GAC) submitted 34 audit reports to the legislature for review. The legislature did not hold a single hearing or take any action on the reports. Likewise, the Ministry ofJustice recently returned a file of 150 cases to the GAC, saying
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that it could not take prosecutorial action on any instance of malfeasance referred to in the reports because the cases were so poorly investigated. Likewise, despite the President's enacting a moratorium on the controversial practice of using private use permits (PUPS) for illegal logging activities, ships continue to leave Liberian ports chock full of illegal timber. Similarly, in the payroll sector, there is very little understanding that government employees are supposed to act in the public good. The majority see government service as a means toward personal enrichment.
b. Political Patronage and Family Ties
Only a small fraction of Liberia’s relatively small population of 3.7 million operates in the formal political, governance, and economic sphere As a result, kinship ties among those elites are strong, and everyone knows one another and their personal and business affairs. There is a cultural trend toward hiring people that you know well and not creating a stir when a family member, friend, colleague, or even an acquaintance does something that is clearly wrong or illegal. Likewise, many interviewees told the LGSS Team that the trend in Liberia is to “live and let live.” Some people we interviewed suggested that both of these are coping strategies to deal with scarcity and protracted armed conflict. In other words, if you have access to a revenue or resource stream, then you must "take care of your own” and spread that wealth around. it is better, at such times, to look the other way than to take action if doing so could create a stir and lead to more violence. Together, these factors are a leading cause ofthe culture of impunity described above.
Relative to the focus of the LGSS, there is no better example of this than the President herself. She has appointed three of her four sons to high-level government positions. Robert Sirleaf is head of the National Oil Company of Liberia (NOCAL). Fomba Sirleaf is head of the National Security Agency. Charles Sirleaf is a Deputy Governor ofthe Central Bank. Many interviewees suggested that they receive personal financial benefit from their positions beyond their official salaries. In August 2012, the president suspended Charles and 45 others for not declaring their assets consistent with her Executive Order. Some Liberian interviewees pointed out the nuance of “suspended” versus “sacked” within Liberia’s culture of political patronage and family ties: He essentially got a slap on the wrist and soon returned to hisjob. The President took care of her own and did not create a stir.
c. Ethnicity and Religion
Although the urban elite/rural indigenous dynamic and youth are factors that greatly impact the four sectors, tribal and religious affiliation is a significantly less important factor in Liberia, especially compared with other West African countries. Muslims and Christians have disagreed about recent petitions by Christians to legally establish Liberia as a Christian nation, though this does not have a significant impact on the country's political economy. However, tribal and religious affiliations do relate to the LGSS topic areas in a few ways. For example, certain ethnic groups, such as Mandingos, are underrepresented in the civil service at large and in the payroll. The forest is of spiritual importance to many of the estimated 40 percent of Liberians who practice indigenous or animist beliefs; destruction of forests through land and concessions arrangements impedes the manner of worship that they have been practicing for centuries. Perhaps most significantly, many interviewees suggested that many Liberians, particularly indigenous Liberians living in rural areas, are highly influenced by religious leaders, as discussed in Section C below, entitled “Agents.”
d. Gender
Women in Liberia face challenges in each of the four sectors:
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In payroll, women are at the lower end ofthe pay spectrum and are underrepresented in the civil service. Rural women rarely get government jobs and nearly all work in the informal sector. Corruption in the payroll sector diverts funds that could go to help women and children by providing them with much needed public services. Government pay often does not reach rural areas where women need it most; it is stolen or diverted along the way. Many rural government workers never actually receive the allowances that they are entitled to (e.g., fuel coupons); many of these are female teachers who comprise a large percentage of rural government workers.
In the land sector, as a practical matter, women can rarely exercise their property rights or inherit property, even though recent changes to the iegal framework aliow them to do so. Often disagreements about [and rights affect women more than they affect men. For example, interviewees toid the LGSS Team that there is no common-law marriage, so many rural women live with the same man for years and have children with him, but are not legally married. Therefore, the woman receives nothing when her husband dies, including the land he owned. Likewise, many rural women have multiple children with multiple men, so the arrangements about which children inherit which parcels of land are very unclear. Other interviewees explained that female business owners are duped out of their ownership rights more often than men. Many women think they own the land they are working on and developing because they have a deed for it; then someone else produces a deed — often a fake one — and tells the female business owner that she is not the rightful owner. She then loses significant investments.
In concessions, most high-paying jobs with concessionaires go to men. Women often perform the lower paying, most tedious and labor-intensive work, such as pulling weeds from under rubber trees or planting saplings. Most concessionaires focus very little on gender issues or gender impact. However, interviewees suggested that land issues are more of a concern to women than concessions because they have a more immediate and tangible impact.
In the auditing and accounting sector, there are significantly more men than women. Some interviewees reported receiving no female applicants for auditing and accounting jobs. Fewer women than men have capacity in the rural areas to conduct any sort of oversight of financial matters.
6. Corruption
Interviewees consistently told the LGSS Team that corruption touches nearly every aspect of daily life in Liberia and that it appears to be more systematic and well-orga nized now than it was during the wars.
In some instances, corruption is still an “every man for himself" (or “every woman for herself") endeavor, in which individual members ofthe elite or elite families benefit from corrupt practices without controlling multiple industries and sectors or rolling up the proceeds of corrupt activities in a systematic way. For example, in the land sector, a member of the elite may gain access to "insider information" and then forge a deed document “proving” that he or she owns land adjoining a proposed development project. He or she benefits from this one-off transaction and passes the proceeds onto his or her family.
But, other efforts involve multiple parties who strategically coordinate their activities over a sustained period, serving as a syndicate. For example, in the payroll sector, some interviewees explained that officials at the MOF, Ministry of Education, and private banks systematically conspire to keep ghost workers on the payroll and split the profits from the arrangements. They often carry out this scheme with the direct knowledge of more senior officials in both ministries. There are times when these higher level officials undermine efforts to remove ghost workers from the payroll, for example, by sending a letter
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ordering the MOF to add people back onto the payroll after they have been removed and then taking a cut of those salaries.
Corruption, as defined by Transparency International, the United Nations, and other international organizations, takes both grand and petty forms. In payroll and auditing/accounting, corruption is primarily classified as petty in nature in the form of ghost workers, double dippers, and leakages, even though the overall amounts of loss can be quite large. in land and concessions, it is both petty and grand in nature, because it affects both clay-to—day bureaucratic transactions (e.g., surveying, deeds, etc.) and enables a small number of private sector interests to capture the state and adapt the ruies of the game to their own interests (e.g., concessions negotiations). Specific allegations of corruption are next to impossible forjournalists to investigate because they lack capacity and the deep tradition of public sector opacity.
2. Formal
In addition to informal institutions, there are formal institutions found in the constitution or codified by law that impact Liberia’s political economy.
a. Strong Executive Power and Lack of Checks and Balances
The President is very strong, both as an individual and as an institution. Weaknesses in the legislature and court systems (see below), coupled with her stature in the international community, often allow her power to go unchecked. Multiple interviewees told us that she and her close advisors make many key decisions with little external input or transparency.- She has proven that she is willing to act under the right circumstances, but weighs the political and economic consequences carefully, even if there are effectively no checks and balances. For example, many interviewees told the LGSS Team that she has personally overseen the renegotiation of certain concessions agreements.
At the same time, however, many interviewees told us that the President also is greatly influenced by international actors, perhaps even more than by domestic actors. They cited the recent PUP scandal as an instance in which she acted
because of international media coverage and pressure to
"if the President supports a specific idea, then, by definition, it is a good idea.”
-One LGSS interviewee
enact the moratorium on PUPs. The LGSS Team also noted, however, that political will deficits and capacity issues at lower levels of government can prevent her policies from being fully enacted.
b. Weak Enforcement, Regulatory, and Rule of Law Institutions
The vast majority of laws in Liberia are not enforced, businesses are not effectively regulated, and justice is not carried out in accordance with the constitution. The culture of impunity is one cause; weak institutions are another. Liberia cannot maintain its own security or enforce laws through the Liberian National Police (LNP) alone; its role is bolstered by the United Nations Mission in Liberia (UNMIL) force, which has been 15,000-strong at times, but is now drawing down. Ministries and agencies in general lack the capacity and will to regulate. Decades of neglect, "brain drain,” and poor leadership have left the judicial system in shambles. Prosecutors have difficulty building basic cases and the courts rarely make independent decisions, meaning that contracts are unlikely to be enforced. Most citizens— and nearly all of the indigenous rural population - do not have or want access to the formal legal system. Yet, the traditional system that they trust lacks consistency, fairness, transparency, and documentation. Petty
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corruption is commonplace throughout all enforcement, regulatory, and rule of law institutions. These conditions have a profound impact on the four sectors included in LGSS. For example, in all four sectors, very few individuals are ever sanctioned or punished for wrongdoing. Likewise, in the land sector, formal courts are not really a viable option for resolving disputes. Few agreements are ever audited or even subject to post-facto audit or review.
c. Ineffective Systems of Accountability and Transparency and an Incomplete Legal Framework
The legislature and incomplete legal framework are a major structural defect in Liberia. Many interviewees pointed out that the legislature is a "rubber stamp”er the executive, rarely holds inquiries, and has very weak committees and staff. Members themselves do not represent their constituencies effectively and are more concerned with personal financial benefit from their own positions than they are about governing in the country’s best interests. On the positive side, some interviewees noted that the legislature has become more involved in budgetary processes recently, having held hearings and included community outreach mechanisms in the last budget cycle. Members have, however, refused to take action on several pieces of recent legislation that could enhance good governance efforts in Liberia and inject transparency and accountability in the four LGSS sectors, but which could also hurt members financially. These include pieces of anti-corruption legislation that would require by law (not executive order) that government officials declare assets and avoid conflicts of interest, establish a fast-track court for corruption cases, and give the Ministry ofJustice power to seize monies, among other measures.
d. Implementation Challenges with Existing Laws
Although many good laws have been passed since the transition in 2003, corresponding implementing regulations and institutions of governance often simply do not exist, thereby worsening conditions for transparency and accountability. For example, many interviewees noted that the passage of the Freedom of Information Law in 2010 was a significant step toward improving good governance, but not a single ministry or agency has adopted a functioning system or process for submitting and receiving a response to a FOI request, making it impossible for the public, CSOs, orjournaiists to obtain information about what officials are making decisions that may benefit themselves financially in the award of concessions contracts to foreign companies.
C. Agents
Agents are the actors that directly affect the political economy of Liberia. They can be either individuals or categories of individuals.
1.lnterna1
Some agents are internal to Liberia, as described below.
a. Political Leaders and Political Parties
Political leaders and parties have a significant impact on Liberia’s political economy. There are four major political parties. Their current influence and characteristics are displayed below.
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Party l Number of Seats | Number of Notable Members of the Party
Held in Senate | Seats Held in
House
Unity Party (UP) 11 out of 30 I 26 out of 73 President Ellen Johnson Sirleaf
Congress for 3 out of 30 | 9 out of 73 George Weah (football star who came in
Democratic | second for the presidency in 2005), who
Change (CDC) l | i is very popular with youth. Winston Tubman, the runner-up in the 2011 Presidential elections
National Patriot 1 6 out of 30 | 3 out of 73 Former president Charles Tayior
Party (NPP)
National Union of 2 out of 30 I 6 out of 73 Former general and current senator
Democratic I Prince Johnson (who assassinated
Progress (NUDP) 1 I 1 President Samuel Doe)
Liberty Party 3 out of 30 I 9 out of 73 Charies Brumskiner former ally ofTaylor,
now a well-known attorney
b. Tribal and Secret Society Leaders
Tribal leaders play an important role in Liberia and can be categorized into three types of chiefs (listed in descending order ofauthority): paramount, clan, and town. There are 66 traditional districts in Liberia, and all ofthem have a paramount chief. The number of clans in a paramount chiefdom varies greatly, based on its size. Every clan has two sections (lower and upper), and each section has a chief. These are really principal assistants of the clan chief, who are not censidered as influential or important as paramount chiefs. The number of town chiefs varies, based on the size of the clan.
Tribal leaders influence the sectors included in the study in several ways. For example, tribal leaders are highly influential on land issues, because rural Liberians generally are governed by the rules of the traditional system, under which chiefs have significant authority. Land can be purchased from the GOl. under the Public Lands Law, and public land sale deeds can be issued in the name of individuals or groups, including chiefdoms and clans, or even smaller communities. Since 2010, however, there has been a moratorium on the sale of public land at the Land Commission’s request to review policy.
Tribal leaders also have significant authority in concessions. Concessions cannot be granted without consulting tribal leaders. Many interviewees suggested that the GOL or concessionaires bribe or buy off chiefs at all levels, depending on where the concession exists geographically. Typically bribes or buy offs can be as small as a pem-pem or a car, even though the overall concession is worth millions of dollars. Often, agreements are made after consultation with the chiefs, but, the chiefs rarely represent the needs
ofthe rural people in making that agreement. For land disputes among rural people, chiefs have power as mediators and arbitrators ofjustice. Social reconciliation and finding solutions that satisfy both parties, at
least temporarily, are extremely important in traditional dispute resolution.
Chiefs also are organized at the national level. In August 2012, the Act to Create the National Council of Chiefs and Elders ofthe Government of Liberia (NCCEL) passed, and, its predecessor, the National Traditional Council of Liberia, was dissolved. The new mandate of NCCEL is to focus on peace building, advocacy, dialogue reconciliation, and protecting cultural heritage.
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Nearly all chiefs are members of two secret societies in Liberia: the Poro Society (men) and the Sande Society (women), both of which exert no small measure of influence on the chiefs. They provide teachers to so-called "bush" schools, which are controversial among Liberian elite. The Sande society is a proponent of female genital mutilation, while the Poro Society has been accused of recruiting rebels during the wars and causing small-scale clashes. About 75 percent of Liberians are members ofthe Pam and Sande societies, and a similar number of youth still attend bush schools in addition to formal schools. The societies are influential everywhere except in Southeast in resolving community conflicts, including those related to land disputes. Many interviewees suggested that rural Liberians will take direction from bush teachers, called Zoes, more frequently than from government leaders. As a result, the Porn and Sande societies are highly influential, and some elected leaders marshal political support through Poro and Sande teachers and membership. Many interviewees noted that donor interventions targeted at rural communities, such as regulatory reforms related to land rights or public awareness campaigns about concessions, should capitalize on the influence ofthe societies.
In addition, other fraternal organizations, like the Free Masons, were historically powerful in Liberia. For example, President Tolbert gained much of his support from the Free Masons. But these entities were outlawed under Doe, lost membership during the wars, and have not returned to their once influential status, but some elite Liberians still hold membership and rely on the organizations for networking and forming business and government relationships. Many interviewees suggested that there are efforts underway to reconstitute them, but that they are not yet a major player again.
c. Professional and Business Associations
Although the private sector in Liberia remains weak, some broad-based business associations are beginning to gain traction. The Liberia Chamber of Commerce (LCC) is the leading business organization in Liberia focused on representing private sector interests, developing the private sector, pushing for reforms to create business friendly environments, and encouraging investment in Liberia. The Liberia Business Association (LIBA) builds the capacity of Liberian businesses, strengthening Liberian entrepreneurs, for example, by helping them to pursue government contracts, which traditionally have gone to foreign firms from Lebanon and Nigeria. The Liberia Better Business Forum is primarily an intellectual gathering of people to exchange ideas. However, most interviewees suggested that these do not have a significant
impact on any of the four sectors that are a focus of this report.
On the other hand, at least one professional association is leaving its mark. The Liberian institute of Certified Public Accountants (LICPA) lobbied for a passage of the LICPA Law, which restricts the access of foreign firms to the Liberian market and requires that they work in fee—sharing arrangements with Liberian—owned firms. Section ii, D of the report discusses the implications of the law on the accounting and auditing sector in Liberia.
d. Civil Society
Liberia does not have a civil society in the literal sense ofthe term. Interest groups do not effectively advocate for positions and receive a response or action from the government on a consistent basis. Donor-funded civil society organizations (CSOs) themselves are extremely weak. Very few have a nuanced or sophisticated understanding of contemporary public administration and policy issues or can serve as an effective voice for reform or watchdog for reforms. However, interviewees suggested that some C505 are beginning to engage the government on key issues relevant to the four LGSS sectors, such as the Center for Transparency and Accountability in Liberia (CENTAL), Actions for Genuine Democratic Alternatives
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(AGENDA), and the Sustainable Development Institute (SDI). Other interviewees noted that some (3505 exist primarily to achieve a political end, and a few interviewees cited Green Advocates as an example.
Many interviewees suggested that international NGOs are far more influential with the GOL than are local (305 and can be the catalyst that makes the GOL take action. For example, many interviewees suggested that international pressure from groups like Global Witness was instrumental in the President’s recent decision to take action to temporarily halt the use of Private Use Permits, a provision of Liberian law which is supposed to allow private landowners to harvest a limited amount of trees on their land, but has been abused through falsified deeds and inappropriate licensing.
e. Community-Based Organizations
Community-based organizations in Liberia are generally very weak. For example, some interviewees stated that concessionaires make a valid attempt to seek the input ofCBOs representing women, youth, or particular geographic areas. But, like their CSO counterparts, most C805 lack funding, resources, and capacities to have a reai and lasting impact.
2. External
Other agents are external to Liberia, but play a significant role in the country’s political economy.
a. Bilateral Donor Organizations and Multilateral Development Banks
Several donors and multilateral development banks (MDBs) are active in Liberia and work in the four LGSS sectors. USAiD, the largest bilateral donor in Liberia, invests more than $160 million per year through a robust portfolio in education, economic growth, health, and democracy and governance. Liberia has qualified for Millennium Challenge Compact (MCC) funding and, is now working with the GOL to design Compact activities. GIZ, World Bank, and AfDB also work in the four sectors. Based on the feedback received from interviewees, the LGSS Team believes donors and MDBs can act as “levers” that exert significant pressure for further reforms. USAID may have the most clout and influence with the GOL because of the size of its portfolio and the historical ties between the United States and Liberia.
b. Regional and International Organizations
Liberia is a member of several regional organizations, including the Economic Community of West African States (ECOWAS), the African Union, and the Mano River Union. None of these organizations have much direct impact on the four sectors, specificaliy, although they have been a valuable tool in bringing about peace in Liberia, fostering economic cooperation in the region, and sharing information and resources, allowing further reforms to occur.
UNMIL may be the most significant international organization that impacts Liberia, because it has been aiding in the country's peace and security since 2003, though it has begun to draw down its forces. Like the regional organizations mentioned above, it has limited direct influence on the four sectors. In payroll, UNMIL has taken steps toward improving payroll accuracy without necessarily building long-term capacity, primarily by reviewing and cleaning the payroll of the police on monthly basis. In land and concessions, UNMIL has augmented the police’s ability to respond to disputes.
Other, less well-known, international organizations do have more direct relevance to the four sectors. For example, LICPA is a member of the international Federation of Accountants {lFAC) and its regional affiliate,
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the Association of Accountancy Bodies of West Africa. They are collaborating on efforts to bring the auditing/accounting sector in line with internationally accepted standards. Likewise, government auditors in Liberia comply with standards established by the international Organizations of Supreme Audit Organizations (lNTOSAl) and the African Organization of Supreme Audit Institutions in English (AFROSAl-E).
As discussed earlier, interviewees suggested that international NGOs are another form of influential international and regional organizations.
c. Multinational Corporations
Many multinational corporations impact Liberia’s political economy. Some interviewees suggested that many ofthe most important ones are concessionaires (discussed in section ||.A.6) involved in the extraction and cultivation of natural resources. Other interviewees noted that significant companies not related to natural resources could be important private sector partners in reforms, such as APM Terminals, Bollore Logistics, Coca Cola, Ecobank, Lonestar/MTN, and Maersk Line Shipping.
D. Drivers of Change
The factors discussed thus far in Liberia come together to influence how change, including policy and institutional reforms, does, or in many cases does not, occur in the country. The LGSS Team refers to these as as "drivers of change.” There are several, stated briefly below and discussed in detail in the "Problem-Driven Analysis" section that follows:
0 There really are “two different Liberias,” each of which has its own priorities: the world of the
urban elite in and around Monrovia governed by the formal system who are "making it big,” and the realm of indigenous rural populations who are just trying to make it. To a great degree, the urban elites control processes of reform to achieve their own interests, not the public good.
0 international donors are highly influential and can use diplomatic and financial pressure as
"levers" 0n the 60L to enact a particular policy at the highest levels; however, implementing policies is often easier said than done, because capacity and political will at the lower levels can stand in the way.
0 The President is extremely powerful and can often adopt a particular policy when she wants to;
she picks and chooses her battles carefully, however, and is keenly aware of the internal and external political, economic, and security ramifications of her decisions. Yet even if she does decide to adopt a particular policy, this does not mean that it will be implemented quickly at all levels of government or society, because ofthe capacity and lower level political will issues referenced above.
0 Actors in the public administration are rarely sanctioned or punished for wrongdoing because of
cultural reasons, poor investigatory capacity, and a lack of political will.
Q The vestiges of war are still present in Liberia. The decimated human capacity ofthe country
should not be underestimated as a significant hindrance to reform. Marginalization of youth and local communities, who have shown a penchant for violence, could be the driver that makes Liberia slide back into conflict.
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I The condition of war has created a sense of economic urgency at both the individual and collective
level. Liberians are more concerned about immediate economic survival than they are about the long-term impact of their decisions.
0 Traditional leaders have a greater influence on the opinions of rural indigenous populations than
any leaders in the formal system.
Ill. Probiem-Driven Analysis
This section states the problem, describes the institutional governance arrangements and capacities, examines the political economy drivers, and provides a framework for reforms in each sector.
A. Payroll
Government payroll in Liberia is a complex administrative process, involving multiple policies, institutions, and processes. At present, about 36,000 civil servants are on the official civil service payroll, making the GOL the largest and most significant employer in the country by far, and accounting for about 40 percent
of overall government expenditures.
1. Problem Statement
Mismanagement and fraud in the civil service system and related payroll processes divert scarce Government of Liberia (GOL) funds away from their intended purposes. Four separate payroll systems exist that are not standardized, lack appropriate internal controls, and allow for an extraordinary level of discretion. Despite the
appearance of political will for key payroll reforms and much
discussion about them, the necessary reforms have not been fully adopted because they threaten entrenched syndicates of corruption, who create “ghost workers" (individuals who receive paychecks without reporting to work) and allow for "double dipping” (individuals receiving multiple paychecks). The GOL is making laudable and noteworthy attempts to address payroll deficiencies, but the system remains inefficient and prone to abuse. This section uses the PEA framework to describe these trends and conditions and suggest measures to address them that are politically feasible.
"Our payroll and allowances system is like an elephant’s meat: big enough that everyone can get a good chunk.”
-One LGSS interviewee
2. Institutional Governance Arrangements and Capacities
Several institutional governance arrangements and capacities exist within the payroll sector, as described below. These include policies that impact the sector, the institutions that comprise it, and the public administration and policy processes in which the institutions themselves operate.
a. Policies Impacting the Sector
Severai policies impact the payroll sector.
Civil Service Reform Act of 1972. This Act establishes the Civil Service Agency (CSA), sets forth a meritbased system for hiring civil service professionals, calls for the President to establish a minimum wage for
civil service professionals, and requires the legislature to pass a civil service payroll budget consistent with the established minimum wage. Major elements of the Act remain unimplemented, most notably, many
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individuals are hired by the GOL outside of the proper civil service channels, as discussed later in this section.
Civil Service Reform Strategy 2008-2011. CSA adopted the strategy as a policy that seeks to "right-size” and restructure the civil service, improve service delivery, provide training to staff, bring about gender equity, and enact pay reforms. With regard to pay reform, it requires each minister or agency head to establish a pay structure for his or her agency in collaboration with the Minister of Finance. These differ greatly from agency to agency, with more powerful ministries (e.g., MOF) paying more than less powerful ministries (e.g., MYCS). The strategy seeks to “clean” the payroll system by removing ghost workers and reinvest recovered costs into better pay and benefits for civil servants. The strategy also requires CSA to administer a civil service examination.
Medium-Term Expenditure Framework. The strategy was established in 2009, but still has not been formally adopted by the legislature as law or implemented by the executive branch as policy. It proposed a comprehensive approach for reforming the payroll system and other civil service elements to make them more effective, efficient, transparent, and fair.
Revenue Law of2002. This law requires the legislature to examine the Government Wage Bill during the budgeting process to ensure that government salaries comprise a certain percentage of GDP. The legislature determined them to be 10.5 percent of GDP in 2009 and 13.3 percent of GDP in 2010.
Public Financial Management Law. The Law requires that all government expenditures, including salaries and allowances, be entered into an integrated financial management information system (lFMlS). The IFMIS is not linked to personnel databases maintained by CSA, nor is the law implemented, because many transactions occur that are not included on the IFMIS.
b. Relevant Institutions
Several institutions in Liberia play a role in the payroll sector.
Presidency. The Presidency sets the overall "big picture” direction for payroll reform, ultimately decides which payroll practices will be enacted, and establishes the salary and wages that will be paid to civil service personnel. The President has made efforts to "right-size” the government by directing ministries and agencies to reduce the size of government and eliminate unnecessary redundancies. Rolling the Ministry of Planning and Economic Affairs (MOPEA) into the MOF is one example. These reforms reduced the size of government, but interviewees suggested that it is increasing again.
Ministry ofFinance (MOF). The MOF disburses paychecks monthly and works with ministries and agency heads to establish actual salaries relative to the wages set by the President. Several offices within the MOF are relevant to payroll:
- The Pay Disbursement Office under the Department of Revenue issues paychecks to the
Comptroller of each line ministry or agency.
- The Physical Audit Department performs onsite audit of payroll disbursement.
- The Bureau of the Budget informs other parts of MOF and GOL, so that they know how much
money is available to pay salaries.
- The Electronic Data Processing Office is responsible for physically adding employees onto the list
of individuals who receive a paycheck each month.
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As discussed in the sections that follow, major deficiencies exist within the MOF that prevent it from ensuring the transparent and accountable use of GOL monies.
Civil Service Agency (CSA). The CSA currently employs 135 staff. Several offices within the CSA play a major role in the payroll process:
— The Director General oversees the entire agency and civil service reform efforts within
government. The President recently announced that she is appointing a new Director General; however, he has not yet taken office.
~ The Comptroller ensures that the names and salaries of civil service members are verified and
actually pays them when funds are provided from the MOF.
— The Civil Service Reform Directorate is responsible for overall reforms pursued at CSA and across
the government.
- The Deputy Director of Administration oversees the process of placing civil service members in
Ministries and agencies.
- The Directorate of Employment Services oversees administration of the civil service exam, position
classification and grading, and leave and benefits.
On the whole, the CSA lacks teeth and the ability to enforce civil service rules at other ministries and agencies.
internal Audit Secretariat. The Internal Audit Secretariat was formed about a year ago to begin to strengthen internal controls in line ministries and agencies, including those related to payroll. The scope of that endeavor is huge, given that few, if any internal control processes and procedures exist and that the IAS has limited resources, though many interviewees Suggested it was a step in the right direction.
GeneralAuditing Commission (GAC). The GAC plays a “watchdog” role and is responsible for auditing the payroll (i.e., ensuring that the MOF issues the right paychecks to the right people) and reports to the legislature and the M01 when those processes are not followed. it often coordinates efforts with donors. For example, the Auditor General (AG) used a pilot project in 2009 to audit the teachers' payroll to see if all the teachers on the list really existed; all teachers in the counties around Monrovia had to register. The AG made recommendations on how to improve the process in 2011 and is awaiting receipt of data to repeat a similar exercise with USAID support. As discussed in the sections that follow, the GAC has several capacity deficits that contribute to a lack of follow-up on its reports.
Line Ministries and Agencies. Each ministry and agency establishes salaries of employees, as discussed throughout this section. in addition, the Deputy Minister and Assistant Minister for Administration (or equivalent) of each line ministry and agency submits a list of who should be paid each month, and the Comptroller of each ministry distributes pay through checks received from MOF. Line ministries and agencies frequently add individuals onto the payroll through means other than formal civil service processes, as described in the sections below.
C505. The CSO sector relative to payroll reform is very weak, with very few organizations advocating for payroll reform. The Coalition of Transparency and Accountability in Education (COTE) actively advocates for reforms in the education sector. Sector-based (250:; that might advocate for payroll reform are very weak. For example, in the education sector as a whole, there are no teachers' associations or parentteacher associations pushing for change.
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Media. Media outlets in Liberia generally have very little coverage of payroll issues. Most of their coverage focuses on lack of raises or general statements about corruption. Some journalists cover the issue ofghost workers, but not with significant depth. Few have the appropriate skills and background to carryout investigative journalism on specific allegations or instances of malfeasance.
Civil Servants Association of Liberia. At one time, the Civil Servants Association advocated for better pay and ensured that civil service members were not dismissed unfairly without representation or due cause. Now, the group is more or less in a state of crisis, since its head, Jefferson Elliott, was fired from government, but refused to step down. His case is currently being litigated in the courts to determine whether he has to step down or not.
Public Accounts Committee. The Senate Public Accounts Committee is the body responsible for holding hearings and inquiries on payroll irregularities, based on reports provided by the GAC. However, it rarely, if ever carries out those duties as prescribed by law.
Donors. Donors provide financial and technical support to improve the payroll sector through a variety of programs. USAID, SIDA, and the World Bank work to improve government capacity and strengthen internal controls. They will initiate a jointly funded and managed Public Sector Modernization Project later this year to address payroll reform in unified and comprehensive way, including embedding a technical advisor to organize overall reforms and a payroll reform specialist to look at issues of remuneration, collapsing payroll, and developing a reasonable salary scheme.
c. Public Administration and Policy Processes
These institutions are involved in several public administration and policy processes. The 60L, in essence, pays four categories of payroll to its employees: (1) the general payroll, (2) the supplemental payroll, (3) financial allowances, and (4) non-monetary allowances. The section below describes how the processes work.
Recruitment, Hiring, and Promotion Relative to the Generoi Poyroil.’ The process of recruiting, hiring, and promoting civil servants in Liberia has significant deficiencies that greatly affect the general payroll and the quality ofthe civil service as a whole. Present practices inhibit the GOL’s ability to manage, reduce, or track the number of people coming onto the civil service payroll, thereby enabling irregularities and a lack of fairness and effectiveness. The civil service is used as a social welfare system and is the primary way to get government funds into rural areas, both of which serve a stabilizing effect on the country, providing
numerous extended families with the money they need to live. Many interviewees suggested that payroll reform could cause economic shocks to those rural areas, but the scope and extent is difficult to gauge without comprehensive data gathering. The system creates "ghost workers," false identities used by someone else to receive pay or individuals who actually exist, but do not really show up to theirjob. “Double-dippers," individuals who receive more than one paycheck, are also common.
These problems exist, in part, because the merit-based process prescribed by law is not followed in practice when the GOL adds civil servants to the general payroll. CSA administers a civil service exa m; according to the policies cited above, passing it is supposed to be the first step in joining the civil service and eventually finding oneself on the general payroll. Individuals who pass the civil service exam are put
7 Teachers do not take the civil service exam in Liberia, but rather are hired on a scale based on the level of certification that they hold. For ease of reading, the report includes teachers in the discussion of the civil service at large.
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on an “eligibility list” and are supposed to fill positions on an "establishment list” — a list of each ministry or agency's approved positions, including how many are filled and how many remain open. The CSA is supposed to maintain this list and, in fact, has a version of it, but in practice, many ministries and agencies hire people based on a system of patronage, regardless of whether they have passed the civil service exam and regardless of whether the position is listed on the establishment list. The CSA has limited practical ability to force ministries or agencies to hire from or fill positions on the lists because it lacks a reputation as an enforcement body and does not have the appropriate resources or skills.
The decentralized recruiting process enables ministries and agencies to directly hire individuals who have not taken the civil service exam (or who have faiied it). Some ofthem lack the required qualifications, except for strong political allegiances to the elites that hire them. The process is not helped by the fact that the civil service exams themselves are outdated, and many senior government officials do not feel that they adequately weed out bad candidates. Further, ministries do not communicate vacancies to the CSA.
Officially, very few employees of ministries and agencies — less than 5 percent on average — are official political appointees: ministers, deputy ministers, and assistant ministers, directors, and deputy directors. These high-level leaders then appoint another 10 or 15 percent of civil servants on an "unofficial" basis, bypassing the examination process. Another roughly 30 percent of civil servants presently on the payroll worked their way onto it during the Doe, Taylor, and transitional government regimes without being hired on a merit basis. The vast majority of them did not go through the formal exam process because it was not effectively administered during the wars. Most interviewees suggested that these unofficial appointments are still commonplace, enabled by the lack of internal controls discussed later in the section itled “Getting on the General Payroll." Thousands more individuals are added to the payroll through the supplemental payroll, which functions separately from the general payroll, as discussed later in this section.
The CSA does not play any role in the promotion of civil servants hired by a ministry or agency. Actual raises resulting from promotion are rare; most individuals receive raises only relative to increases granted by the President when she increases the minimum wage for the civil service.
The Difficulty of Reforming the Civil Service to Impact Payroll: The Example of GAG
Despite efforts to reduce the size of the civil service as a whole, it remains bloated. The General Auditing Commission (GAC) is a prime example of how widespread the problem is and of the political uproar caused when entrenched interests are threatened. The Auditor General (AG), who heads the GAC, recently dismissed 42 of 437 staff members who lacked even the basic qualifications for their job and were underperforming. There was significant protest, including the dismissed staff marching on Ashmun Street in downtown Monrovia with a casket to which was affixed the AG’s picture. He was called to testify in front of the Senate because the upset dismissed workers complained to their representatives. Dozens lobbed allegations of corruption at the AG himself. At present, the 42 individuals have not yet been restored to the payroll, despite extensive media coverage favoring their position. Despite his effort, hundreds of staff members with performance issues still work at the GAC. More than half of the technical staff lack the appropriate degrees in finance, accounting, or auditing. At present, the GAC has 33 janitors on its payroll, nearly one for every room in the building — and one for every 13 staff members. Many interviewees agree that conditions at the GAC are the norm, suggesting that the civil service has some qualified individuals at higher levels in managerial positions, but that skills at the middle and lower levels are not as strong. Many civil servants cannot read and write.
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Position Grading and Classification on the General Poyroii. With USAID and other donor support, the CSA has developed a process of position grading and classification, under which the same positions in different ministries will have the same salary. This has not yet been rolled out, however; at present, positions and pay are not standardized, enabling ministries and agencies to pay their workers what they want on their own without CSA oversight. The current system has 15 grades, but even those standards are not rigorously followed. For example, a "Chief of Office Staff” in one ministry and a “Special Assistant” in another have the same job description and play the same role, but one could make $500 per month, while the other makes $1,000. The new process of grading and classification will reduce the position classification and grading system to 10 grades, with multiple steps within each.
Getting on the General Payroll. Historically, Individuals often are added to the payroll without going through the civil service system because ofa profound lack of internal controls. This still can, and does, occur. A “personnel action notice," including an identification number, is the form issued by the CSA that officially puts an individual on the general payroll when it is forwarded to the MOF’s Electronic Data Processing Office (EDPO). The same form and process is supposed to be used to take a person off the payroll, in the event of termination, death, or resigning. However, in practice, these are not issued as frequently as they should be. As a result, individuals no longer employed often still receive pay. Phone calls or correspondence to the MOF EDPO can result in a person being put on the payroll, even without an identification number. Many of these individuals have never taken a civil service exam; some take it only after they are appointed to their positions. Sometimes individuals are "hired" informally, but never formally placed on the payroll. For example, someone mightjust assume the duties and identity of a deceased person and begin picking up their paycheck. Sometimes, individuals transfer from one agency to another and get paychecks forjobs at two different ministries, resulting in double dipping. There are plenty of ways to end up on the payroll — orjust receive a paycheck —even if one is not formally hired into the civil service system. As discussed in a later section on corruption, the process of getting onto the payroll is controlled by an organized and deeply engrained system of corruption that has developed over decades.
Data integration. Lack of appropriate data integration across agencies is another weak internal control that allows the addition of workers who have not been vetted through appropriate civil service channels. To understand how this happens, one must first understand how data is managed within the GOL, as described below.
The Government Accounting Payroll System (GAPS) is the "legacy" data management system, which the MOF has used to track who is being paid on the general payroll and in what amounts it actually cuts checks. At the same time, the CSA’s legacy data management system is the Civil Service Management System (CSMS), which lists names and positions and tracks personnel action notices and pay amounts, both for individuals who can be hired and for those who actually have been hired into the civil service. In theory, these two databases should contain exactly the same information for individuals who have been hired; in reality, they do not match because of the practices described above. Moreover, they are not linked, and reconciliation has not occurred often and systematically enough, despite the CSA's best efforts.
Both of these systems are now being rolled over into the integrated Financial Management Information System (lFMlS) developed by Freebalance, a well-known Canadian company. The MOF is migrating GAPS data into the payroll module of IFMlS, whereas the CSMS is being migrated into IFMIS’s Human Resource Information Management Information System (HRMIS) module. Both are linked. This process is supposed to be completed by June 2013, but it is very likely not on target to reach that goal, as discussed below. Interviewees suggested that the information migrated onto IFMIS/HRMIS is the most accurate reflection of who should be on the payroll, because it is being verified as it is migrated over, again, as described below;
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however, the MOF is not yet cutting payroll checks and making direct deposits from the lFMIS system. Instead, checks are cut from GAPS. The CSA periodically checks them against the data that it is migrating into HRMIS. MOF is supposed to be cutting some checks and making direct deposits from the IFMIS in 2013, but not all employees will be entered into the IFMIS system until sometime in 2016. Until then, they will be paid from the legacy GAPS system, thus still allowing off-line additions to the payroll.
In addition, some ministries and agencies have their own personnel databases, which contain another set of data that may or may not match what is contained in GAPS, the Civil Service Agency Payroll Database, lFlVllS, or HRMIS. In some instances, this is because they hire their own staff without notifying CSA by simply working with MOF to have the person added to the payroll. In others, it is by design. For example, the Ministry of Education has the Education Management Information System (EMIS) which contains payroll data that can be linked to IFMS. However, this information is still manually matched to GAPS which, once again, makes it easier to add additional ghost workers.
Making General Payroll. The Minister or head of each agency determines the salary for each employee on a yearly basis in collaboration with the Minister of Finance, relative to the minimum wage set by the President. The Ministry of Finance then pays salaries monthly in a hard-copy check or direct deposit in Liberian dollars, based on the contents of GAPS. Comptrollers of each agency or line ministry distribute the hard-copy checks. Direct deposits come from the Ministry of Finance and are made to about 50 percent of civil servants. Overall, fewer than 10 percent of Liberians have bank accounts, however, and even fewer in the rural areas, making direct deposits difficult. Although direct deposits are preferable, because they limit the human interaction that can facilitate corruption, they are not foolproof, because banks can be persuaded to set up direct deposits into bank accounts of ghost workers. Mobile money solutions are a long-term option, but they cannot be a comprehensive solution until mobile phone penetration becomes greater and until better solutions are found to reach illiterate users. In addition, because so few Liberians in rural areas have bank accounts, individuals must pick up cash at mobile phone operator agents, often at a kiosk, which requires human interaction and created the opportunity for funds to be stolen.
Because of its own fiscal limitations, the GOL continues to rely on international donors to pay salaries. For example, the IVIOF recently requested that USAID fund 87 GOL positions. In an effort to consolidate these types of requests and bring about the reforms that would be necessary for donors to want to fund them, the GOL and donors formed a Joint Working Group on Payroll Reform. At present, the group has met about four times, but not for the last six months.
“Cleaning” the General Payroll Through Verification. CSA is leading an ongoing effort in Liberia, in collaboration with the MOF, to determine who is on the general payroll, eliminate ghost workers and double-dippers, and ensure that every person who is getting paid actually should be getting paid. On the whole, this effort is a step in the right direction, but it is not yet complete. The process of cleaning the general payroll through verification starts by registering all individuals on the payroll with CSA, taking data points like their name, date of birth, salary level, title, office, and agency/ministry that they work for, and entering that data into the HRMIS module of lFMlS. CSA takes their picture, fingerprints them so that they have biometric data, and issues them an identification card. This will allow CSA to identify double-dippers and ghost workers easily by comparing their data to what is listed in GAPS.
Eventually, this process should be automated when the MOF begins cutting checks and making direct
deposits from IFMIS, but not fully until 2016, as discussed above. Until then, a certain percentage of salaries will be paid through the old GAPS system, thereby greatly increasing the chances that ghost
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workers and double-dippers are being added to the payroli system. This, in essence, makes cleaned payroils dirty again.
CSA has met some resistance to its efforts to clean the payroll. Often, as the CSA accuses individuals of double-dipping or of sewing as ghost workers, they fight the determination by showing up at the MOF and demanding that they be placed back onto the payroll, sometimes even with threats of violence. Often the MOF then adds them back onto the payroll.
For this reason, the CSA has developed a large file of information (which they refer to as “cases") about ghosts and double clippers, so that they have appropriate information to refute claims made to MOF that individuals have been unfairly removed from the payroll. CSA frequently checks the actual payroll against HRMIS to remove people that have been added back on, finding a few recent MOF additions every month.
Another issue is that the process of verifying and cleaning the general payroll is not yet complete. At many smaller ministries, the process is 90 to 100 percent complete. in larger, more decentralized, ministries with a heavy presence in the counties, the process is 60 to 72 percent complete. in total, CSA has verified and biomarked about 59.5 percent of the overall civil service general payroll. It is possible that the unfinished percentages are composed of many ghosts and double-dippers. In addition, although a ghost may come out of the woodwork to register and pick up an identification ca rd, there is no system-wide control to ensure that he or she attends his or herjob after doing so. It is important to note that these figures apply only to the general payroll; there are tens of thousands of other individuals on other categories of payroll, as described in the paragraphs that follow.
Supplemental Payroll. An equally problematic issue is that CSA has not begun the process of verifying and cleaning the supplemental payroll. Supplemental payroll includes individuals who are formally added to the government payroll without going through the civil service process. For example, it might include teachers who were recruited a month ago. It does include a large number of teachers who volunteered during the war and were transferred onto the payroll after the wars ended. None of them have had their credentials verified. Others have been on the supplementary payroll for years, because they were added as an urgent temporary measure and then there was no follow up. Others have been added to the supplemental payroll when the GOL reaches out to donors to fund specific positions within the government.
At any time, the supplemental payroll may have tens of thousands of individuals on it, most of whom work for the Ministry of Education or Ministry of Health in remote areas of the country. Some interviewees said that as many as 30,000 individuals are on the supplemental payroll. Others put the number at closer to 10,000 to 15,000. Both sets of figures could be accurate, given that the supplemental payroll fluctuates on a monthly and yearly basis, as the GOL adds or subtracts personnel from it. For example, the Ministry of Education might add a few thousand individuals to the payroll after they graduate from training.
Supplemental payroll makes the issue of verification and cleaning even larger and more complicated. For example, the Ministry of Education has about 15,000 individuals on the general payroll (about 60 percent verified and cleaned, but with individuals still being added) and maybe twice that number on 1the supplemental payroll (even less verified and cleaned with individuals being added). So the potential for ghost workers and double-dippers to remain in the system is still tremendous, even today, despite the GOL’s best efforts. Some interviewees suggested that the CSA has not been able to get a handle on the scope ofthe supplemental payroll because it lacks appropriate resources to do so.
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CSA is getting some help cleaning and verifying in the larger and more dispersed ministries. Under L‘lTP, USAID is working with the Ministry of Education to verify individuals on the Ministry of Education payroll, many of whom work in hard-to-reach rural areas that are difficult to monitor. First, LTFP completed an annual census in 2012 to determine who the teachers were at different schools, what their qualifications were, and where the schools were located, and other information about the quality of the school not necessarily relevant to payroll. This process shows where verification is necessary and revealed the scope of the problem. For example, some schools have 100 teachers for 100 students, other schools have one teacher for hundreds of students, while still other schools have dozens of teachers, none of whom actually show up. The Ministry of Education is working now to align the census data with the payroll; however, the key person responsible for this recently resigned. GAC is also auditing the supplemental payroll, but has not yet completed it.
Second, a separate, but related LTFP verification exercise indicated that the problem of ghost workers may be especially prof0und on the supplemental payroll at the Ministry of Education. Their analysis suggests that there may be as many as 4,100 ghost schools and multiple ghost workers at each school.
Third, LTTP is prepared to provide identification cards to teachers and install biometric devices that read thumbprints at schools in five counties to monitor attendance of teachers and link their attendance electronically to their pay, as payrolls at those schools are cleaned. The idea is that teachers will not receive a paycheck if they do not show up in the classroom. The machines are solar-powered and connected to a solar-powered lnternet source.
There are a number of potential pitfalls with the approach. Some interviewees raised concerns about the machines being stolen. They will require maintenance, which the Ministry of Education may not be able to provide over the long haul. The MOF needs to have appropriate processes and internal controls in place to ensure that teachers are not paid iftheir thumbprint and card is not scanned; many interviewees suggested that those controls are not in place. Rolling the pilot effort out to a larger number of schools will be expensive, though it is difficult to estimate those figures, because the cost depends on the number of teachers who actually work at each school, a number that cannot be known until further verification is completed. This will be a challenging endeavor, as ghosts are often “migrated,” meaning that if payroll at one school is cleaned, a manager can simply move them to a school where the payroll has not been cleaned. Monitoring is difficult because access to the schools is so difficult. Those challenges can likely be overcome. However, the most disconcerting aspect of the LTTP effort is that the entire effort is currently stalled because of a lack of political will at the Ministry of Education to continue it.
Allowances. Monetized and non-monetized allowances are the two additional categories of payroll that exist. During the yearly budget process, each minister or agency head establishes a set of allowances to be paid to employees of his or her ministry. Amounts and application of the allowances differ greatly based on seniority and the influence of the minister or agency head. There is no standardization of allowances across ministries or agency, or framework to guide their application.
For example, some interviewees cite examples like this: A high-level employee in the powerful Ministry of Finance might get a food and transportation allowance of US $2,000 per month, whereas a low-level staff employee at the MOF might get US $80. However, both high~ and low-level staff at a less influential ministry, like Youth, Culture, and Sports, might receive only coupons that can be used for fuel or "scratch cards” that can be used to buy mobile phone time.
Allowances are paid in U.S. dollars, where as the general and supplemental payrolls are paid in Liberian dollars. Allowances in some ministries and agencies can be valued at as much as three times an
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employee's annual salary. Overall, the consensus of interviewees was that about 20 percent of civil servants get allowances, whereas 80 percent do not. In some ministries, however, every single employee gets an allowance. Not a single ministry or agency has developed or implemented criteria for the distribution of allowances. Allowances are not tracked in any data base by CSA or any ministry or agency. Very few, if any, ministries or agencies can tell how many allowances they pay and in what amounts, even though they are supposed to keep a record and report to the MOF on an annual basis. MOF is supposed to pay monetized allowances in a manner similar to that which is described above and keep a record of what checks are cut, but this is problematic, since the interview team heard that many allowances are paid in cash, with the checks being cut to senior member of a ministry or agency. Now, allowances are beginning to be processed through the IFMIS, but this process is not completed.
Ministries and agencies have a great deal of discretion over which employees get allowances each month and how much, resulting in a highly discretionary system that is prone to corruption and abuse. The entire process reinforces the system of patronage because distribution of allowances is entirely at the minister or agency head’s discretion. The financial allowances are often stolen; an entire “black market” exists for government-provided phone scratch cards and gas cards where they are commonly bought and sold. Some ministries use allowances to "hire" senior-level staff members that aren't even on the normal
payroll at all; they only receive allowances and not a salary.
Some interviewees suggested that the allowance issue is even worse beyond the civil service level. Legislators and political appointees get a “special allowance" above and beyond the "general allowance” that civil servants get. Most legislators hire their family and friends to be members of their staffs.
3. Political Economy Drivers
There are a number of elements that drive political economy in the payroll sector, as discussed below. This section discusses stakeholder incentive, interests, and influence; examines political economy drivers, such as the rents and resources distributed and who has veto power over reform; looks at the social and historical context of the sector; identifies the areas most prone to corruption; discusses islands of integrity that USAID can work with; discusses how the sector’s political economy leads to specific behavior; and proposes an action framework, including a discussion of who wins and who loses from the proposed reforms.
a. Stakeholder Incentives, Interests, and Influence
This section describes the incentives and interests of each of the institutions and stakeholders to promote or hinder payroll reform. It considers their political spheres of influence, relationships, and alliances.
Stakeholder Interests/Incentives Exert Influence On? influenced by?
President/Presidency - Key element of her platform has - Has heavy influence over all
been payroll reform, but the issue government institutions involved has not progressed very far. | in payroll reform.
- Receives significant international l - Has not yet swayed or forced
pressure for payroll reform from ministers and agency heads to donors and has told the public at I adopt overarching payroll reform. large that she will enact it (e.g., - Will be influenced by her own USAID, MCC Compact funds, etc.). > party, the UP, as well as the
- May be wary of pushing ministry, opposition parties, all of which agency leadership, and lower-level have a significant number of
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civil servants too far down the path of payroll reform (see below), because they benefit from the existing payroll system and try to undermine payroll by refusing to submit paperwork, misplacing files, and not adhering to policies,
etc.
Fears the economic impact of payroll reform or that moving too quickly would push the country back into conflict.
Has made excuses about why payroll reform has not occurred; biamed "the rainy season” in a recent speech, but recently is to alleged to have chided the Minister of Education and others for not acting quickly enough to reform payroll.
members in the civil service who will not want payroll reform to happen.
Is influenced by the ministers in her Cabinet who allegedly talked her out of payroll reform right before the last election.
Minister of Finance
Publicly states that he wants to implement a payroll reform agenda.
May be wary of pushing reforms too quickly because of the potential for political backlash, or even civil unrest.
ls concerned about the overall financial health of government, which is made less stable by the high cost and unpredictable nature of the payroll system.
Has not yet taken the steps necessary to implement payroll reform.
Fears the economic impact of payroll reform or that moving too quickly would push the country back into conflict.
Has heavy influence over all GIOL ministries and agencies, except possibly the Centrai Bank.
Nearly all ministries and agencies want to be on good terms with the Ministry of Finance, because it determines the amount of funds available for each ministry or agency; so he may be able to “force” some reforms.
CSA Director General
The previous CSA Director General genuinely wanted to implement the President’s payroll reform agenda, but did not deliver, because he did not have the
qualified personnel or resources to do so. Although the recently appointed CSA Director General has not articulated a position on
Has limited influence on ministries and agencies because he has limited clout, enforcement, or
sanction power; many interviewees suggest that his agency “lacks teeth.”
Has some influence over lowerlevel civii servants, because they
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payroll reform, it is likely that the nature of the position will require him to embrace payroll reform, but will experience similar capacity hurdles.
Receives pressure from the President and (to a lesser extent) the Minister of Finance to implement payroll reform.
May be wary of pushing lowerlevel civil servants (see below) too far because they could undermine payroll reform s by refusing to submit paperwork, misplacing files, and not adhering to policies,
etc.
May fear the economic impact of payroii reform or that moving too quickly would push the country back into conflict.
recognize that public administration processes under
the direction of the CSA Director General can influence their
livelihoods.
Has influence on the President to make payroll reforms happen.
Auditor General
Is a reformer looking to ciean up his own agency and others, but is hampered by lack of qualified staff and negative perceptions among Liberians.
Has legal mandate to ensure that only civil servants hired through the merit-based system receive paychecks.
Reports to the legislature; receives some pressure from it to ensure that civil servants are being paid appropriate@
All ministries and agencies have some fear of the Auditor General because of his enforcement and sanction powers; therefore, they often do what he says.
Influence is weakened by the fact that the legislature and Ministry ofiustice do not act on reports of malfeasance issued by the Auditor General.
Has influence on the President to encourage her to enact payroll reform.
Ministry and agency leadership
Many interviewees suggested that many ministers and agency heads generally do not want payroll
reform to occur, because it would limit their ability to use discretionary allowances and increased pay as a tool for power and influence; though very few say that publicly.
If payroll reform occurs, many will experience backlash from their staff who will receive less take home pay, especially if allowances are brought under control and the few payrolls are collapsed into
Have high levels of influence over the civil servants in their ministry, because they have a significant say in who gets on the payroll and how.
At the same time, they lack the "moral authority" to back reforms because they are paid at such high
levels.
Have less influence upward on the President, but do have some and many are resistant to payroll reform; however none are going to be able to publicly express that because it is difficult to be agairE
Sensitive But Unclassified (SBU)
one.
Will also receive backlash from the syndicates of corruption within their agencies who receive significant illicit financial benefits from leakages, ghost workers, and double-dippers.
transparency reforms in public. However, many interviewees suggested that they will be willing to proceed now that the election has passed; if the president says to do it, then they have no other choice.
Civil servants — hired thr0ugh official
processes
Their interest, in pa rt, is to keep working and earning a living without addition of unofficial civil servants to the payroll.
Some still against payroll reform because it very likely will result in less take-home pay for many, especially if allowances are brought under control and the four payrolls are collapsed into
one.
Others will be against payroll reform because they will lose benefits gained, because syndicates of corruption receive significant illicit financial benefits from leakages, ghost workers, and double-clippers.
Their influence is limited, because they are not organized and the union representing them is weak (see below).
Some, however, have political clout through the ruling or opposition powers.
They can always threaten to take to the streets or engage in violence.
Civil sewa nts — not
yet hired at all
Their interest is to be hired in a
merit-based fashion and earn a
living as a civil servant if they are not well-connected, or to obtain favorable political treatment and obtain a job through any means
possible.
Payroll reform wili may make it easier for them to get jobs, or at least make the process more
Their influence is limited because they are not organized and the union that wouid represent them is weak (see below).
Some, however, have politicai clout through the ruling or opposition parties.
They can always threaten to take to the streets or engage in
violence.
Civil servants — hired through unofficial
processes or put on supplementary payrolls
Do not want to see payroll reforms occur, because there is a chance they could lose theirjobs as meritbased processed take root.
Will be against payroll reform, because it very likely will result in less take-home pay, especially if allowances are brought under control and the four payrolls are collapsed into one.
Others will be against payroll reform, because they will lose benefits gained, because
Some exert significant upward influence on the President, because many have close ties to her and are influential within the
UP.
Others exert moderate influence on the President, because they have ties to opposition parties and made it onto the payroH during the wars or transition periods.
They can always threaten to take to the streets or engage in
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syndicates of corruption receive significant illicit financial benefits from leakages, ghost workers, and double-dippers.
violence.
Civil Servants
Association of Liberia
- Have not articulated a position on
payroll reform.
- Concerned primarily with ensuring
that civil servants get more pay and aiiowances and better
benefits.
Is not influential because it has been in leadership crisis (see previous description under "Relevant lnstitutions” above).
Legislature
— Likely will oppose payroll reform,
because they receive large allowances themselves and know
it is a matter of time until theirs
get cut back too.
- Also may oppose payroll reform
because their constituents might oppose it.
Influenced highly by civil servants because they are in important constituency.
Could hold hearings or inquiries about payroll reform efforts, but are uniikely to impede the path of payroll reform, because it is primarily an issue to be resolved in the executive branch.
USAID and other
donors
- Want to see payroll reform occur
to ensure adequate return on its
Have significant influence to sway decision makers at high levels.
investment.
b. Economics and Power
This section illustrates how rents and resources are distributed and received in the payroll sector and what parties have veto power over reform.
Stakeholder Rents/Resources Distributed and | Veto Power Over Reform?
Received President/Presidency - Determines whether or not payroll | Yes. Almost absolute, but
caiculates decisions carefully. Contemplates advice provided by her ministers and advisers.
reform moves forward.
- Determines minimum wages within
the civil service and overall budget allocation to civil service salaries. Minister of Finance l - Determines, in collaboration with the
President, how much budget is
allocated to civil service salaries and
allowances. - In part, determines whether or not i payroll reform is implemented, l because MOF processes must be
i
Yes, but not as strong as President.
payroll reform is implemented,
because MOF processes must be
adapted to implement it.
CSA Director General | — Establishes and enforces the rules for
the merlt~based system, many of which are not followed.
- In part, determines whether or not
payroll reform is implemented, since
Yes, but not as strong as President.
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MOF processes must be adapted to implement it.
GAC Auditor General
Can initiate the process of sanctions for noncompliance with payroll laws, but relies on follow up from the legislature and M01.
No
Ministry and agency leadership
Determine pay levels.
Distribute allowances.
Bring civil servants onto the general and supplemental payroll without going through formal processes. Ultimately determine whether payrolls are cleaned or not.
Some have refused support from donors to clean their payrolls. Extract illicit payments from those on the supplemental payroll or those receiving allowances
Engage in syndicates of corruption that skim funds from the regular civil service payroll in a systematic way.
Some. Exert pressure on the President.
Civil Servants - not yet hired at all
None
No, but some upward influence as discussed previously.
Civil servants — hired
through official
processes
Receive salary and allowance. Some mayr receive illicit funds.
No, but some upward influence as discussed previously.
Civil servants - hired through unofficial
processes or put on supplementary payrolls
Receive salary and allowance. Some may receive illicit funds.
No, but some influence through opposition parties, as described above
Civil Servants I None i No
Association of Liberia
Legislature | Approves the annual budget, including | No
payroll.
USAID and other 1 Provide funding and technical assistance | None
donors
to the payroll reform effort
c. History
The present state of the payroll problem in Liberia is directly related to the country’s troubled past. Many
employees currently are on the general and supplemental payrolls found their way onto them during the wars. For instance, the government attempted to keep health and education services ongoing even
through the war, often through a system of volunteers. When the war ended, many of these individuals were put on the general and supplemental payroll without taking the civil service exam, having their
educational background checked, or other forms of vetting. Likewise, the current allowances system was developed under Taylor, who wanted it as a means by which his cronies could have more immediate financial control over scarce government resources. Salaries were extremely low (e.g., $50 per month for a minister) and salaries were often not paid for months at a time, so the allowance system became an
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effective tool for rewarding those who did what he wanted. Generally speaking, the wars left the payroll system in shambles. Very few records existed and nobody even had a accurate count of who was in the civil service. Now that the war has ended, the civil service has become a form of social welfare that keeps the society peaceful and stable.
d. Social
Several social trends and forces are at play in the payroll sector:
0 Perhaps most important, the civil service is a form of social welfare and stability for many families. Because Liberian families often include many individuals in an extended family living off of one breadwinner, the impact of taking away someone’s paycheck — even if it is earned illicitly — will affect a great number of people.
- Young professionals find it very difficult to get government jobs because the system is
characterized by patronage.
0 Women are relatively well represented in the civil service overall, comprising about 30 percent of the payroll overall, with the vast majority sewing in lower level administrative and secretarial positions.
e The civil service itself is aging. There have been efforts to get people to retire, but there is little
incentive to do so. This makes it difficult to reduce the size of government.
' Culturally, Liberia is characterized by a "live and let live” mentality, which does not seek to pass
judgment on others for their actions, even if they are illegal.
e. Corruption
The payroll sector is full of opportunities for corruption, and many points are vulnerable to fraud and mismanagement:
Q Corruption in the payroll sector operates through organized syndicates. For example, officials in
the MOF, Ministry} of Education, and private banks collaborate to keep ghost workers on the
payroll end divide up proceeds from those efforts. Each group has a specific role:
- Ministry of Education officials create fake identifications for employees that have a teacher or employee’s picture along with a name and'identification number of someone else who has stopped showing up to work, is deceased, or does not even exist. They can also generate fake identification numbers with no real person attached to them.
- MOF officials put that person onto the payroll without going through formal processes, often
at the request of a higher level Ministry of Education officiai.
- Banks cash checks that go to the sameperson who is holding multiple identification cards with pictures that match the person picking up the check, but different names. They may banks cash the checks with no identification at all.
- MOF Pay Teams that travei out to the counties keep a portion ofthe checks even though they
are supposed to be ensuring that checks go to the right people. Many checks are often returned to the MOF, but no reverse entry is carried out, meaning that the MOF never actuain knows whether it distributed a check to an individual or not.
— District Officers and County Executive Officers often receive a cut for looking the other way.
These three groups often ca rry- out these activities with the direct knowledge of higher level
officials in both ministries. In addition, these same officials undermine efforts to remove ghost
workers from the payroll, for example by sending a letter ordering the MOF to restore people to
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the payroll after they have been removed. Many interviewees suggested that senior leadership is then taking a cut of those salaries. it is common for one supervisor to skim off of salaries of his entire office.
0 The overall civil service system is not merit-based and, as a result, the entire payroll system is
prone to corruption, because senior-level individuals can return political favors through patronage and engage in cronyism and nepotism by doling out positions in a manner not in accordance with merit-based systems.
0 Allowances themselves are even more prone to corruption, because their discretionary nature
creates more chances for allowance resources to be diverted for unintended and illicit purposes.
0 Many interviewees suggested the officials at all levels skim portions of paychecks that go to lower
level employees, which is enabled by the patronage system. For example, “I’ll give you a job, but you give me y0ur first six months’ salary.”
0 Paychecks are often stolen. People then use a variety of techniques to pick up checks and cash
them (e.g., fake IDs, “tipping” the teller at the bank, giving a friend a small kickback in the payroll office for giving you someone else's check, etc.).
0 Ghost workers remain a huge problem. In some cases, ghost schools and offices also are an issue.
f. Islands of Integrity
There are very few building blocks that exist within the payroll system that good governance that USAID could use as a foundation for future programming and promotion of good governance practices. The verification processes currently underway are a step in the right direction; they have been led by the CSA's HRMIS Director, whom the LGSS Team views as a reformer. The President is the primary individual that will back the reform. In the opinion ofthe assessment team, she will be supported by the Minister of Finance, AG, and the CSA Head. Although it is an external actor, LTiP is well-positioned to help in the education sector.
4. Summary and Action Framework
This section summarizes the main patterns of behavior observed by the LGSS Team in the payroll sector as they relate to the political economy factors discussed above and proposes a strategy for moving forward. At the end ofthe section, the LGSS Team provides a matrix illustrating the potential winners and losers from these proposed reforms.
a. Patterns of Behavior Relative to the Political Economy
The political economy analysis of the sector from above reveals the following key patterns of behavior.
First, the payroll reform effort has been slow to take off, under-resourced, and piecemeal because many individuals benefit from the current system:
0 High-level government officials, who like the discretion that the current system gives them over
allowances;
0 Government officials at all levels who benefit from syndicates of corruption;
Civil servants at the lower and mid-levels that carryr out the syndicates or benefit from other
leakage opportunities;
0 Individuals who may be on the payroll, who do not actually work at all.
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Because of the nature of Liberian society, reducing the amount of take-home pay to these individuals, whether it is licit or illicit, will have an impact on them and their extended families. Payroll reform threatens those interests, and they likely try to impede its progress. Low capacity further exacerbates difficulty of implementation. Donor influence can serve as an important lever to bring about holistic reforms in the sector, and donor technical assistance can add quality and capacity to the effort.
Second, because ofthose challenges, payroll cannot be reformed only through the verification and biometrics described previously, which is where the GOL has placed much of its effort to date. A more comprehensive action plan is necessary, the basic tenets of which are outlined in section “b” below.
Third, the general consensus of interviewees was that the President, and only the President, can make the decision to enact payroll reform, even though there will be political backlash from that decision, mainly from civil servants themselves and their families and friends, and possibly from a few ministers in private. Some interviewees suggested that the political blowback could include protests, but that the President’s power will be able to overcome that resistance. The future of reforms in the sector hinges primarily on the President’s decision on whether to adopt them. However, the majority of interviewees, including her close allies, felt that the President was behind the effort and that that she would make the tough decision to proceed with payroll reform. Many interviewees suggested that because she has the power to make them a reality, her lack of visible support has hindered the progress of reform. Although her close allies state that she supports them, this has not been stated beyond those who interact with her personally on a regular basis. Many suggested that she nearly decided to move forward in 2011, but was talked out of it by a handful of ministers because it was too close to the election. Others suggested that payroll reform is politically viable, because political viability is an issue of who gets the most votes and, right now, more people are being hurt by the system (e.g., those that who low salaries and no allowances, those that cannot get government jobs because of an unfair system) than benefit from it. So, it might actually be a politically popular decision in a majority of households. Many reports suggested that the President gave a dressing down to some key ministers at a recent Cabinet retreat, particularly the Minister of Education, for not taking enough action against ghost workers.
Finally, given the history of behavior of nearly adopting payroll reform only to avoid it at the last minute because of political interests related to the elections, many interviewees suggested that the time to enact reforms is now. Payroll reforms will be politically sensitive and need to be addressed before the 2016 election cycle begins to heat up; otherwise they will not be fully addreSSed.
b. Action Framework
Against that backdrop, the LGSS Team believes that all of the steps below can be adopted by executive order and do not require any sort of legislative action, except where noted. The action framework below needs to be carried out in close collaboration with the World Bank, which is placing a pay advisor within the CSA, and SIDA, who also is working in the sector on modernization efforts. It is important to point out that these reforms will not address the salaries of ministers or political appointees. Many interviewees suggested that such a course of action is not politically feasible at this time. Someone at a high level within the U56 must meet with the President’s Office after the remainder of this action plan is vetted with her key advisors, such as the Minister of Finance and the CSA Director, and confirm that her office is behind it. Listed below are the steps that the GOL would need to adopt to enact payroll reform with donor support:
Step #1: Establish a Task Force. The Minister of Finance, CSA Director, and donors should establish a Task Force to monitor and guide payroll reform. Many interviewees suggested that it must meet regularly,
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unlike previous task forces, which met several times and then were essentially abandoned. The task force would accomplish two main tasks: (1) coordinate the overall efforts of the parties involved to bring about the reforms (i.e., CSA, MOF, ministries, etc.) (2) but also work with enforcement bodies (MOJ, LACC) to prosecute some of the most egregious cases of malfeasance to Whittle away at the culture of impunity that exists in the sector. The task force could place expatriate advisors into the MOF and CSA who can monitor the progress of reforms and provide technical assistance toward their adoption
Step #2: Obtain Appropriate and Accurate Data for the Entire Payroll. With the support of donors, the GOL, likely through the MOF and CSA, will need to conduct a rapid study of who is on the payroll and how much each is being paid through the general payroll, supplemental payroll, monetized allowances, and nonmonetized allowances. Figures need to be documented on costs per month, per quarter, and per year to provide a baseline on which further decisions can be made. This already has been done at least once overall (for the Medium-Term Pay Strategy) and several times for certain ministries, but multiple interviewees said the data is unreliable, outdated, and needs to be gathered again. Current efforts to verify payroll will be extremely valuable in making this study more accurate.
Step #3: Improve lnternol Controls for Addition of Employees onto the Payroll. During this time, an internal control needs to be implemented at the Electronic Data Processing Office at the MOF. At present, they still add individuals onto the payroll without receipt of a personnel action notice. This often occurs when individuals determined to be ghost workers or double-dippers are removed from the payroll and complain to MOF or other ministries or agencies that they have been unfairly removed. Improved internal controls can be realized by first conducting an internal controls assessment, strengthening those controls, and then giving another agency, like CSA, appropriate oversight over that function.
Step #4: Develop an Adjudication Process. At the same time, the Task Force needs to establish and implement an adjudication process so that complaints from those who believe they are unfairly removed can be heard and acted on in a fair, unbiased manner. This would stop individuals who have been removed from the payroll from getting their names added back into the system unless their claim is found to be legitimate.
Step #5: Elevate the CSA to a Civil Service Commission. Article 89 of the constitution states that the civil service should be managed by a Civil Service Commission. Many interviewees suggested that the elevating the CSA to Commission status would give it considerably more stature than it presently has as an agency. Commissions (e.g., GAC, National Elections Commission) generally are viewed to have more teeth in Liberia than agencies. This would give the new CSA a formalized seat at the table, more clout, and a clear enforcement mandate, while serving as a symbol that the civil service reform effort — rebranded as the important issue of payroll — is addressed Others have suggested that the CSA should actually be a "Public Services Commission” that oversees not only the civil service, but also the judiciary, security sector, and public corporation. This, however, would require a constitutional amendment, which many interviewees suggested is not feasible at this time.
Step #6: Develop a Hypothetical Collapse into a System of Position Grading and Classification. Holistic payroll reform rests on fair position grading and classification. The data from Step #2 can inform an analysis of what each employee is receiving in salary and allowances and help to develop a hypothetical model of grades and steps that roughly corresponds to what each earns now. Most interviewees suggested that the new salaries will not be equal to current general payroll or supplemental plus monetized and/or non-monetized allowances. The GOL simply cannot afford to do so and will not want to formalize many ofthe high-levels ofallowances that are being paid. Certain individuals wouldn’t correspond to the scale. The position grading and classification system needs to tie salaries to position
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titles and estimate what actual new salaries would be. This process will take at least 90 days. One important consideration is whether the new system will be paid in U.S. or Liberian dollars. Paying in Liberian dollars is the preferred option, because it would ultimately strengthen and stabilize the currency, but this step needs to be coordinated with the Central Bank to ensure that there are en0ugh Liberian dollars to pay the new salaries in that currency.
Step #7: Calculate A Cash Out. To make the pay reform exercise more politically feasible, many interviewees suggested the idea of paying a one-time cash out — a bonus of sorts - to each government employee when he or she moves onto the new payroll system. Most interviewees suggested that this might be the equivalent of a few months’ salary and allowances. The cash out would need to be calculated based on the information gathered in steps #2 and #6 and agreed to in the national budget. Some interviewees suggested that this would provide significant incentive for public officials, because many do not look beyond the immediate next few months. The promise of a large payment would, in effect, be palatable to them because they do not necessary have a long—term financial view.
Step #8: Develop and Rallout a Communications Campaign. The GOL would need to develop an overall plan for conveying the reform to the civil service and public at large. The campaign should point out the benefits of collapsing the pay system. For example, it should emphasize the cash out. Likewise, for some members of the civil service, collapsing their pay would actually increase their salary. Likewise, it would give young graduates a fairer shot at getting a governmentjob. Some individuals might be swayed by the argument that allowances do not contribute to retirement. Interviewees suggested that the campaign rely on a combination of fliers, jingles, workshops, radio shows, and high-level speeches both in Monrovia and in the counties. Radio will likely be the most effective means of communicating to areas outside Monrovia. Messages need to be simple and concise, as in other campaigns that were fairly effective in Liberia, such as those that educated people about the elections. The campaign needs to be coordinated closely with other communications campaigns carried out by the MOF and Governance Commission.
Step #9: Register and Verify Individuals on the Payroll. Government employees then need to be formally placed onto the new position grading and classification system. Interviewees suggested that this can be accomplished by creating a "drop dead” date for being placed on the new system and having supervisors meet with their subordinates to tell them where they will be going and then file appropriate paperwork with CSA and MOF. Biometrics can also be taken at this time. It is very liker that CSA, ministries, and agencies will need additional manpower and equipment to support the effort of verifying these additional individuals onto the payroll.
Step #10: Provide the Cash Out. Once the cash out amount is calculated and approved, MOF will provide it formally, by check or direct deposit, to the workers who have rolled onto the new system. MOF should not provide the cash out to ghost workers or double dippers because they will have been eliminated in Step #9 above.
Step #11: Auditing the Process. The GAC should conduct periodic audits of the process. Donors will need to provide support to lobby M01 and legislature to take action, if and when instances of malfeasance are found.
Step #12: Establish a Principal Administrative Officer in Each Ministry or Agency. The goal would be to put a permanent person in each agency or ministry to ensure consistent adherence to rules, such as ensuring that proper processes are followed when adding people to the payroll. The Principal Administrative Officer (a career government employee) stays in each ministry or agency, even when more high-level political officials are dismissed, move on, etc.
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Step #13: implement Time and Attendance Mechanisms. More efforts need to be made to capture who is really working, where, and on what. Some agencies, like GSA, tried electronic timesheets, but access to electricity and computers are limited. Biometrics is being done in a few ministries, using thumbprints and pictures, but it has its drawback as discussed earlier. A strong system of pa per timesheets may be appropriate in some ministries and agencies, especially those outside of Monrovia.
Step #14: Promote Electronic Payment Options. The GOL can also change the way payments are made. All civil servants in urban locations should have bank accounts for direct deposits, to limit personal interaction that can lead to corruption, making it more difficult to steal checks or pay ghost workers. With donor support, the GOL also could explore mobile money approaches using mobile phones in rural areas, to pay health workers and teachers in areas where banks do not exist.
Step #15: Establish and Roi! Out a Performance System. After the new positions and grading system have been in place for six months, the GOL can roll out a promotion system to link pay increases to performance, in addition to providing cost of iiving adjustments. As it stands now, people get increases when the President announces pay raises. Young people entering the civil service have no career path. They do not know where they will end up in 10 or 20 yea rs. Providing this performance element could result in a more effective civil service.
Step #16: Feedback Loop. The process will need to be monitored on a monthly basis and adjusted accordingly as problems arise or when troubleshooting is necessary out. The process will need to consider what shocks are experienced in the monetary system because of the changes.
The table below explores what parties would benefit from the major eiements of the reforms described above, based on trends and patterns in the responses of interviewees.
Possible Reform or Action | Who Wins? Why? 1 Who Loses? Why?
Elevating the civil service agency | The (ISA, because it will give help Those who benefit from the
to a civil service commission l their stature and clout as an l loose civil service system, such
enforcement body. l as high-level agency officials and
civil servants themselves.
- High-level ministerial and
agency officials who gain illicit enrichment from the
current process and are able to add on individuals to the
Strengthening internal controls I - Strengthening internal
controls enables the GOL to
ensure that individuals are
hired through the civil service payroll and reduce payroll costs. l payroll without going
- lndivid uals who want to join l through the formal process. the civil service through fair l - Individuals who are added means, because they will i to the payroll outside official have an easier time doing l processes.
so.
- International donors,
because they spend less money supporting GOL payroll.
- The President, Minister of CSA Director,
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because they live up to payroil reform commitments.
| Coliapsing payroll and adopting a
position and grading classification system
Ultimateiy, collapsing enables the GOL to manage
its expenses more effectiveiy.
Individuals who want to join the civil service through fair means because they will have an easier time doing
so.
international donors, because they spend less money supporting GOL payroll.
The President, Minister of Finance, and CSA Director, because they live up to payroll reform commitments.
- Current members of the civil
service, because they will see some pay reductions.
- Ministry and agency
leadership because they lose the power and influence that come with discretionary allowances and the ability to add individuals to the payroll without going through formal processes.
Providing a cash out
Current members of the civil
service, because they in essence get a bonus to join the new payroll system and they often have short-term financial views, rather than long—term views.
- Nobody really, but will I
require a significant amount of financial resources.
B. Land
The land sector is evolving and comprises numerous policies, institutions, and processes. Left unaddressed, fundamental problems in the land sector will be a significant impediment to future equitable economic development and could be a driver of armed conflict.
1. Problem Statement
The land sector is plagued by several issues, including incomplete and
l , . l maccurate records that were destroyed durlng the war, parallel
frameworks, multiple and contradictory laws, and limited capacity.
systems of customary and formal law, inadequate institutional frameworks, multiple and contradictory laws, and limited capa
“Out of confusion and chaos comes great opportunity."
-One [.688 interviewee
willing to exploit weaknesses in the system. As the wars ended, many displaced individuals and families
Fraud and corruption are commonly carried out by individuals who are willing to exploit weaknesses in the system. As the wars ended, many
returned home after a decade or more, and numerous conflicting claims to land arose. Women and rural communities are especially marginalized by the present system.
i
The recent draft Land Rights Policy Statement, a reform effort that is clearly headed in the right direction, wiil bring about significant change over the iong-term, but will also cause certain flashpoints between
urban elite and rural indigenous populations. Ii has not yet been adopted formally through passage of
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new laws and revisions to the existing policy structure. The President’s recent announcement of her intention to form a dedicated land ministry or agency is another major policy shift that could further enhance good governance efforts, but it also raises questions about what functions should be included in the new entity. This section uses the PEA framework to discuss the reasons underlying these conditions and what can be done to address them.
2. Institutional Governance Arrangements and Capacities
Several institutional governance arrangements and capacities exist within the land sector, as described below.
a. Policies Affecting the Sector
A number of policies affect the land sector in Liberia and are rooted in the country’s urban elite and rural indigenous historical dynamic. A few with a major impact on the political economy of Liberia are discussed below.
Hinterland Law of 1949, amended in 2001. This law provides a framework for the GOL to administer tribal land and affairs through tribal chiefs, who can govern according to tribal customs and traditions, “as long as these are not contrary to law.” This, in effect, gives indigenous rural populations the ability to manage land, even though it was still owned by the state. Amendments to the law in 2001 formally institutionalized the local-level structures that govern tribal land and affairs, including paramount chiefs, clan chiefs, and town chiefs.
Public Lands Law of 1956. This law essentially repeals portions of the Hinterland Law, returning customary land to public land status and creating a dual system of land tenure: urban elites have the right to own land through formal deeded means, whereas land used by rural indigenous populations is viewed as public land without specific ownership rights through deeds. However, the law gives indigenous people the right to use public land, and they continued to carry out their livelihoods on public land, even though they do not technically own the land. The law also prevents foreigners from owning land. It establishes several roles: County Land Commissioners, who report to the County Superintendent and Public Surveyors at the county level, who work in close collaboration with surveyors in MLIVIE. In addition, the law establishes a framework for a controversial process of "tribal certificates,” by which rural indigenous populations allow community members and urban elites to eventually obtain deeds to private lands, as discussed below.
Registered Land Law 0f1974. This law was intended to replace the deed system in Liberia that was imported from the United States with a land titling system. A deed system is essentially a collection of documents which gives property rights, based on a paper trail in which the search for title occurs when property exchanges hands. Rights are recorded in a government-managed registry of documents, but the government is not held liable for damages that arise from inaccuracies in the data in the registry. On the other hand, a land titling system is based on the land itself; the government maps land, creates parcels, and tracks them in a centralized management system. Under a titling system, there are no title searches, since the registry is viewed as correct; if it is not correct, then the government can be held liable for damages that arise.
The 1974 law remains in effect in Liberia today. Most of the country, however, relies on a deeded system, because the wars prevented the GOL from making the necessary investments to implement the titling system, drew attention away from the effort, and destroyed records. Some parts of urban areas, like Monrovia, operate under remnants of the land titling system that was implemented.
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The law also has an “adverse possession" clause, which states that when land is occupied by the same party for 20 years in an uncontested manner, then the occupier can gain legal ownership of the land. This is problematic, because many properties have been squatted on for more than 20 years in Liberia because of displacement caused by the wars.
The law also establishes probate courts, which are responsible for formally approving land documents, as described in more detail in the section that follows.
The Constitution of 1986. The Constitution of 1986 gives individuals and groups of individuals the right to own land, restricts ownership to those of “Negro descent," establishes that land ownership does not apply to subsurface mineral rights, preserves inheritance rights, states that owners shall be compensated when land ownership rights are infringed upon in the name of the public good, and allows land disputes to be settled in both the formal and customary systems.
Minerals and Mining Law of 2000. This law states that even if an individual or community owns the surface land, they do not have the rights to the minerals or other resources that lie below the ground, which belong to the GOL.
Community Rights Law 0f2009. The law further establishes that communities have certain rights to public land, even though the land is not deeded. Most notably, the law gives communities access to community forests and the right to manage them for community purposes.
Property Law (revising Titles 29 and 34 of Liberian Code) of 2000. This law attempts to establish a deed system for registering land and processes for leasing land, but is largely considered unenforceable because of the manner in which it is written.
Act to Govern the Devolution of Estates and Establish Rights of Inheritance for Spouses of both Statutory and Customary Marriages (also known as the Inheritance Law) of 2003. This law gives women the right to inherit property and land, but is problematic for several reasons that make it difficult to apply the law. In many instances, the law is not respected by formal courts or customary leaders. Many Liberians are polygamous, so it is not always clear which spouse is supposed to inherit property. Many Liberians live together for a long time, but the law does not recognize them as common-law arrangements, thereby applying property rights in such arrangements.
Land Rights Policy Statement of 2012. This draft policy statement attempts to establish an overarching and holistic land rights policy in Liberia. It accomplishes this by establishing four basic types of land rights: public land, government land, private land, and customary land. in addition, certain types of land can be classified as protected areas where commercial activities are limited or not allowed. On the whole, the Land Rights Policy Statement is a significant divergence from past policies because it gives customary owners of land, whether the land is deeded or not, the same rights as private owners of land. This means that tribal communities have the "unrestricted and perpetual right to use and manage the land in accordance with customary practices and norms, to exclude all others from use and possession, and to sell, lease, or otherwise transfer all or some of the rights associated with the land to any individual, private entity, or the Government.” The changes it prescribes will not happen overnight; some interviewees suggested that implementing the recommendations of the Land Rights Policy Statement may take 20 yea rs
or more.
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Criminal Conveyance Act. . The legislature is considering this act, which will criminalize acts of fraud in land transactions in response to an increase in the number of times that certain properties were illegitimately sold to multiple buyers. Some interviewees suggested that the PUP scandal is helping to marshal support of the law. The Land Commission has been a proponent, but individuals who benefit from the current system are against it, such as surveyors.
[1. Relevant Institutions
Several institutions in Liberia play a role in the land sector. Some of the most significant ones are discussed below.
President. The President is responsible for several aspects of land policy and administration in Liberia. In a recent speech, she proposed to form a “Land Agency" or "Land Ministry” that would strip away the responsibility of managing land from the Ministry of Lands, Mines, and Energy and combine it with other land-related functions into another agency. At present, the President and other GOL parties have not decided how that body will be established or structured. The President has the power to lease public land and significant authority over approving sale of public land, as described later in the section entitled "Public Administration and Policy Processes."
Ministry ofLands, Mines, and Energy (MLME). MLME is responsible for managing all land affairs in Liberia and accomplishes this role primarily by managing surveys, mapping, and assisting in the development of new policies related to land.
Department of Land, Surveys, and Cartography. This sub-office within MLME is responsible for surveying public and government land in Liberia and providing maps.
Countyievel Land Surveyors. Each county in Liberia has one resident surveyor, who reports to MLME and is responsible for working in coordination with MLME to survey land and produce documentation for deeds and maps.
Center for National Documentation, Records, and Archives (CNDRA). CNDRA is the office responsible for managing deeds once they are registered by Liberians. CNDRA receives significant support from USG through the Land Policy and Institutional Support (LPlS) project and the World Bank. LPIS is working to rebuild the deeds registry with appropriate documentation. The process is painstaking and time consuming, but critical for the country's development. For example, at present, CNDRA is accepting and scanning about 5,000 deeds per month and there likely more than one million that will need to be entered.
Ministry of Foreign Affairs. The Ministry of Foreign Affairs is responsible for managing all deeds created before 1960.
Forestry Development Authority (FDA). FDA is responsible for managing and regulating activities on forested land, which comprises about 30 percent of total land in Liberia. In reality, the FDA has little capacity to carry out its duty. It is understaffed and lack proper equipment, ranging from cars to 615 and mapping systems.
Ministry ongriculture (MOA). MOA manages the public land used for agricultural purposes, including rubber, cocoa, palm, and coffee.
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Law Reform Commission. The Law Reform Commission is responsible for rewriting laws and policies related to land, in collaboration with the legislature.
Ministry of internal Affairs. MIA oversees the sub-national structures involved in land rights, administration, management, and dispute processes. it is likely that the 601. will soon adopt a new local government act that spells out the provisions for local governance decentralization; the GOL currently is writing a draft. In the meantime, however, MIA is responsible for managing two important sets of local
actors:
District Commissioners and County Land Commissioners. Together, they are responsible for issuing tribal certificates, which is one step in allowing private individuals to acquire lands under customary control. They manage boundary harmonization, which means getting citizens to agree to boundaries.
Chiefs. MIA supervises paramount and clan chiefs. Paramount chiefs control a larger area than clan chiefs. Both sign off on tribal certificates. Some of them are responsible for mitigating land disputes. There also are town chiefs that control a smaller area than clan chiefs, but they do not really have a role as significant as paramount and clan chiefs.
Land Commission (LC). The formation of the LC in 2010 demonstrated the GOL’s commitment to overarching reform in the land sector. The LC’s overall goal is to analyze the land issue and establish policy options. Three years into its five-year mandate, it has produced the Land Rights Policy Statement, as
described earlier, which is largely viewed as a forward-thinking reform.
P
Environmental Protection Agency (EPA). EPA is responsible for enforcing environmental regulations on land, such as wetlands and wildlife protections, but lacks capacity because it does not have appropriate training, resources, or political support.
Probate Courts. Unique to Liberian law, probate courts are responsible for verifying deed documents before they are filed with CNDRA. In reality, the probate courts make only small changes to the documents and do not add value to the process.
Ministry of Finance. The Bureau of Revenue collects fees associated with land registration and transfer and property taxes, though their capacity to do so is not as robust as it could be, in part because corresponding systems are weak (e.g., property valuation, deed management, etc.).
Ministry of Justice (M01). The MO] is responsible for prosecuting cases related to land and enforcing the laws of the countries through the Liberian National Police, including those related to land. In reality, it prosecutes few and its ability to respond to land disputes is limited.
Other Courts. Magistrate courts, circuit courts, and the Supreme Court are responsible for resolving land disputes in the formal legal system, whereas tribal chiefs and elders resolve land disputes in the customary
legal system.
Sustainable Development Institute. SDI monitors the management of land and advocates for equitable distribution of resources. SDI worked with Colombia University to publish “Smell, N0 Taste,” a recent article on the impact of land and concessions issues on local communities.
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The Center for Transparency and Accountability in Liberia (CENTAL). CENTAL is the Transparency International Chapter-in-Formation that advocates for transparency and accountability in public transactions, including those related to land.
Green Advocates. Green Advocates is a local CSO that advocates for environmentally friendly use of natural resources, including land.
Save My Future Foundation. The Save My Future Foundation is a Liberian CSO that advocates for reform on environmental issues, including land.
Foundation for Community Initiative (FCi). FCI is a Liberian CSO focused on lobbying for women’s rights in community resource management, including land. It is funded by the Americandewish World Foundation.
Global Witness. Global Witness is an international NGO that has been influential on natural resource management issues, including land. Many interviewees suggested that they were instrumental in getting the GOL to take action on the recent PUP issue.
Rights and Resources Initiative (RRI). RRI is an international coalition of NGOs and C505 that provides support to Green Advocates and SDI.
Conservation internationoi. Conservation International is an international NGO interested in increasing the number of protected areas in Liberia.
University of Reading (United Kingdom). The University of Reading is carrying out environmental assessments to analyze how land management and concessions issues are affecting local communities.
USAiD and the U.S. Department of State. USAID and the U.S. Department of State have supported significant reform efforts in the area of land through support to the Land Commission, CNDRA, and mitigating land disputes.
Norwegian Refugee Council (NRC) NRC carries out mediation activities in order respond.
c. Public Administration and Policy Processes
The institutions above are involved in several public administration and policy processes. The section below describes those that are relevant to the political economy of the land sector.
Draft Land Rights Policy Statement. The next step in adopting the draft Land Rights Policy Statement is clear: it needs to be formally adopted by the legislature, while it already has been reviewed by Cabinetlevel ministers who made some minor comments. At present, the Land Commission is leading a regional public consultation process, through which communities learn about and provide input on the draft. This likely could lead to additional changes and modifications. However, it is likely that many of the laws listed in the “Policies impacting the Sector” section above, as well as some other laws and executive orders, will need to be amended and an overarching land law passed by the legislature. The Land Commission already
'' c -| a i A LIICCU LU ucumu-uc.“ w.“ c I i has completed the process of determining which laws need to be changed and what ways they need to be modified. it is beginning to inform the legislature about the nature of those changes. Most interviewees thought that the draft Land Rights Policy Statement will be adopted in a manner close to its current form with some minor changes by the legislature.
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Forming a Land Ministry or Agency. In her annual speech to the legislature in January 2013, the President stated her intention to submit “a bill to separate the land function from the Ministry of Lands, Mines, and Energy to establish an agency with a focus on land matters.” At present, however, a bill has not yet been submitted or adopted, and the GOL has not yet determined which functions and agencies will be part of the new ministry or agency.
Evolution of the Land Commission (LC). The LC was formed with a five-year mandate, and more than three years have elapsed. The GOL needs to decide whether the LC will continue to stand on its own as an independent institution or be rolled into the new land ministry or land agency, but still play a land policy function.
Moving Public Land into Private Hands through Tribal Certificates. Tribal certificates are a major source of conflict and disagreement in Liberia. They allow all Liberians to purchase public land that is under tribal tenure and eventually obtain a deed for that land. However, in effect, it is mainly urban elites who complete the entire process to convert a tribal certificate to a deed because they understand the formal "min" new- system and have significant resources. They use the process to purchase land previously used or occupied by rural indigenous communities at a very low price if the indigenous communities were willing to issue tribal certificates. If an individual wants to purchase public land, including land under traditional use, these are the steps that are supposed to be followed:
1) A citizen first must obtain consent from tribal authorities (i.e., the chief or sometimes a traditional
leader) to obtain a tribal certificate.
2) If his or her request is accepted, then the citizen pays a fee to the clan or paramount chief "to
make a token of his good intention to live peacefully within the community” and then is granted a tribal lands certificate.
3) The paramount and clan chiefs sign a tribal certificate, which has to be approved by the District Commissioner and the Land Commissioner, so that both can certify that the land is not part of a tribal reserve or otherwise owned or occupied by another individual and, therefore can be eventually deeded to the applicant.
4) Then, the individual takes the approved tribal certificate to the MOF's Bureau of Revenue and pays a fee (a minimum of US$50 per acre) to the Bureau for the land covered by the certificate. The actual fee is based on the MOF’s assessment of the value of the land.
5) Next the individual sends the receipt from the Bureau of Revenue along with the tribal certificate
and an application to the Office of the President, so that a county—level surveyor can survey the property, working under the supervision of MLME.
6) If the president approves the application, then the individual takes the application to the surveyor,
who surveys the land. The surveyor draws up a deed for the land.
7) The President then signs the application.
8) The deed is sent to a Brobate eeurt for approval and then must be registered with CNDRA.
The steps above are not always followed, because some are skipped or re—ordered, often with an illicit payment here or there. A great number of tribal certificates never proceed past step 3 and remain in the hands of the individual who received the initial certificate. There may be tens of thousands of tribal certificates floating around in Liberia and other countries, but nobody knows for certain how many there are, though the GOL is trying to collect and document those that exist. Many individuals think that they have land rights and actually own the land because they have the tribal certificate, but really it is only the first step in getting a deed, as described above, and they never actually complete the process. In addition, many tribal certificates — perhaps thousands — have been forged, because the institutions above lack the
50
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capacity and will to verify their authenticity. As a result, many deeds have been incorrectly issued based on them. The end result is confusion over who actually owns the land, including drawn out legal battles
and even violence.
Registering Land. Land can be registered in a manner similar to that which is described above in steps 4 through 8, except that it does not involve the President. The registrant has to have the land surveyed by MLME, a county-level surveyor, or a certified private surveyor who draws up a deed. The registrant pays appropriate taxes to the MOF Bureau of Revenue, has the deed probated, and files it with CNDRA.
Surveying Land. MLME is responsible for conducting land surveys or overseeing county-level surveyors. Only MLME can survey public land. They have about 70 surveyors that are certified by MLME. There are dozens of additional private surveyors that certify private land, who are supposed to be approved by MLME, as well, but in practice generally are not.
Leasing Land . The President has the power to lease land for any purpose for a period up to 50 yea rs.
Selling Privately Held Land. For privately held land, the transaction takes place between two private parties, and it is their responsibility to make the process official, following the "registering land process” described above.
Regulating Land Use. There are also certain restrictions on land use, such as those related to zoning or environmental considerations, like wetlands.
Resolving Land Disputes. Land disputed are endemic in Liberia, largely because the systems of governance have failed. The court system lacks the capacity to handle the large number of cases involved, and many rural indigenous populations do not trust the court system, preferring to have their disputes settled through customary means. However, many traditional forums have struggled to solve disputes because of the large number and emotions involved.
Donors are making efforts to settle disputes outside the courts, including USG (through lNL’s MLDL Project and USAID's LCRP Project) and NRC, Less than 2 percent of land disputes in rural areas have any sort of formal documentation, like a deed or tribal certificate. Most only involve oral complaints. Most ADR and mediation efforts involve conducting research on the background ofthe complaint, understanding the history of the land in question, obtaining community input, and then working to find a workable solution between the two parties. Many of these decisions are made in public, so that there is community buy-in after the mediation occurs and the community is there to enforce the agreement. The major challenge as Liberia begins to develop is how to document and validate the output of these ADR and mediation efforts and make them legally binding. Sometimes, they are documented in a memorandum of understanding or in a document that looks like a deed, but is not actually filed with CNDRA. Some donors, like NRC, have licensed land surveys that can provide a map. These efforts give the parties a sense of confidence that the outcomes will be respected. Solutions can be creative or unconventional. For example, they may not actually decide on a specific boundary, but provide one party long-term access to another party’s land or a specific resource.
Most rural cases are boundary 0r Inheritance disputes or invotve issues over access to resources or
farming areas. Local communities often solve them through the chiefs or traditional leaders, even if the decisions are not formally documented and there is no support from an international organization.
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Some interviewees suggested that a new trend is emerging in land disputes as development proceeds in the rural areas. Disagreements are no longer about the land itself, but rather, focused on resources. For example, when an international donor announced the development of a hydroelectric power plant, two communities recently had a dispute about who owned a waterfall, which had been a natural boundary between the two communities for centuries. They weren't really concerned about who owned it per se, but wanted to know which side of the river would get the jobs associated with the plan and who would recieve the electricity generated.
3. Political Economy Drivers
There are a number of elements that drive the political economy in the land sector, as discussed below. This section discusses stakeholder incentives, interests, and influence; examines political economy drivers, such as the rents and resources distributed and who has veto power over reform; looks at the social and historical context of the sector; identifies the areas most prone to corruption; discusses islands of integrity that USAID can work with; discusses how the political economy of the sector leads to specific behaviors; and proposes an action framework, including a discussion of who wins and who loses from the proposed reforms and actions.
a. Stakeholder Incentives, Interests, and Influence
This section describes the incentives and interests of each of the institutions and stakeholders to promote or hinder reforms in the land sector with specific focus on the draft Land Rights Policy Statement and the formation ofa land ministry or agency. It considers their political spheres of influence, relationships, and
alliances.
Stakeholder Interests] Incentives | Exert influence 0n? Receive Influence
From?
President - Faces significant international I — Has strong overarching influence over pressure to reform land policies. l all ministries and agencies involved in - Recognizes the potential for land land management.
disputes as a driver of conflict. - Has less influence over tribal - Recognizes the potential for land authorities, but can potentially
disputes to serve as a disincentive influence tribal authority since chiefs for economic growth, because all are managed through the Ministry of natural resources that will drive I Internal Affairs.
economic growth through foreign - Has less significant influence over the investment are tied to land. courts; courts have shown that they will - Faces internal pressure, because I overrule in certain instances, even
land and natural resources issues are i though they remain weak. receiving significant public attention.
- Wants to form a Land Agency or
Land Ministry. - Proposed local government act
could reduce the influence of the president. Land — Wants to see the draft Land Rights - Members are appointed by the Commission Policy Statement adopted into law President, so they are influenced by her.
— Wants to see further land reforms
occur.
- The draft Land Rights Policy Statement
has broad stakeholder input, so it has
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- Wants to understand the future of
the Land Commission after its mandate expires.
been influenced by all levels of Liberian society, including local communities.
MLME
- Many senior managers do not want
to see the formation of a Land Agency or Land Ministry, because MLME will lose power, staff, and authority, as well as budget and unofficia! revenue; however, the Minister himseif is strongly in favor of forming a Land Agency or Ministry.
- The Minster of MLME is strongly in favor of adopting the Land Rights Policy Statement, even though his senior leadership team may be against it.
— MLME officials, particularly
surveyors, stand to lose significant unofficial revenue if the land ministry or land agency is formed, because such a move would likely
put them under closer management.
- The Land Rights Policy Statement
also could likely make it more difficult for MLME to grant licenses for mineral exploration and extraction, since local communities will have more land rights.
Has control over public lands with minerals on them, so it can influence the actions of mining license holders (artisanal, smallholder, and large mining operations, such as BHP Biliton, Accelor Mittal, China Union, Putu Mining, etc.). Has technicai expertise and generates revenue, so the President listens to its advice; so it exerts upward influence on
her.
At the same time, the President appoints key leadership of MLME, so she influences it.
if a Land Agency or Land Ministry is formed, it likely will have some jurisdiction over managing forested land, and FDA could lose some power, staff, and authority as well as budget and unofficial revenue.
Has control over timber and logging operations, such as At1antic Resources, Mantra Forest/LTTC, A1pha Logging, etc. Has technical expertise and generates revenue, so the President iistens to its advice; so it eXerts upward influence on
her.
At the same time, the President appoints key leadership of FDA, so she influences it.
Ministry of Agriculture
If a Land Agency or Land Ministry is formed, then it iikeiy will have some jurisdiction over managing agricuitural lands, and MoA will lose power, staff, and authority as well as budget and unofficial revenue.
Has control over palm oil operations, such as Sime Darby, Golden Veroleum,
etc.
Has technical expertise and generates
revenue, so the President listens to its advice, so it exert upward influence on
her.
At the same time, the President appoints key leadership of MoA, so she
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influences it.
NOCAL if a Land Agency or Land Ministry is NOCAL's leadership is influential 0n the
formed, then it could have some President, while the President also jurisdiction over managing land that influences NOCAL’s leadership. eventually has oil concessions, and NOCAL could lose power, staff, and
authority as well as budget and unofficial
revenue. center for Some interviewees suggested that if ~ The records they maintain are integral National a Land Agency or Land Ministry is to the process of land deeding, so many
Documentation, Records, and
a Land Agency or Land Ministry is formed and if it assumes a lands record management function, then
other institutions rely on them. However, they are not that influentiai
ArChiVes CNDRA COUId lose Power, Staff, and with the Land Commission, President,
BU’EhOFiW, as we“ 85 bUdget and or legislature in how policies regarding unofficial revenue. land are developed.
- Other interviewees suggested that if i " Their director is largely viewed as being CNDRA is abSOFbEd into the Land reform-oriented and can influence the
Agency Of Land Ministrvi the" it individuals In the agency to reform the might recewe more attention and process of registering deeds, which has therafore gain POWER Staff, I demonstrated progress. aUthoritV' and bUdget- i The director is influenced by the
President, because she is an appointee. WW5 — Has influence over revenue generated Finance cleared and secured, the Ministry of and expenditures planned through the
Finance might gain revenue through l nationa| budget process_ taxat'on‘ i — The President influences the MOF,
because she appoints its key ieadership, Ministry of if a land agency or ministry is formed and i M Has dose re|ation5hip5 with Chiefs, so
Internal Affairs
if it separates land governance from other local governance functions managed by MIA, then MIA could lose power, staff, and authority, as well as budget and unofficial revenue.
i
tends to represent some of their interests at the national level.
The President influences the MIA because she appoints its key Leadership.
Large landholders of
20,000 acres or
more
- They likely will resist both the
formation ofa land ministry or agency, as well as the terms ofthe draft Land Rights Policy.
— Many large landholders are
government officials or urban elites in Monrovia.
- Process of legitimizing customary
claims to land puts their landholding at risk, because many think they own tribal land because they hold tribal certificates, but tribal certificates are not deeds.
- Aiso there is discussion that the
They likeiy make an attempt to work through the legislature or with the President
and key ministers to oppose certain
elements of the draft Land Rights Policy
Statement as it is adopted.
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draft land policy or the land agency/ministry may seek to restrict the amount of land that they can own, unless it is developed.
Traditional * They already feel that tribal land — Traditional leaders are highly influential leaders belongs to them, so full adoption of on rural indigenous populations and (Paramount the draft Land Rights Policy and its affect their opinions.
Chiefs) | recognition of customary rights will I - They are SUPEWiSEd and Paid by
be WElcomEd- l Ministry of Internal Affairs and, even — Influence over land rental fees l though they are elected, they can be
accrued from logging concessions . removed by the President. Legl-‘Jature - They ratify concessions on public I — They will likely want to determine the
land so they might push foi a large size and location of public land.
area to be a part of public land so - Constituencies might influence their that concessions can be more easily | actions, and vice versa_
ratifiEd' l — They have oversight responsibility over TheV IEVV taXESI WhiCh might 1 other actors, including the executive.
influence thEir Views towards the | - Has oversight over the Executive Branch different category 0f land ownersmp i which is headed by the President, so private' PUbHC' and government 1 can both influence them and cooperate {e.g., having more private land | with them means more taxes]. Judiciary They interpret the laws, and might have Has no direct or supervisory authority in the (Courts) Influence over the final policy. land sector per se, but coordinate the affairs
of the state with legislature and the executive and can check their actions. M01 Wants to have specialized courts to Has some influence on the President, but
address land matters. also will be influenced by her because they
are under executive control. WW- influenced by rights-based
— Rights—based CSOs might push for
community rights.
- Conservation CSOs might push for
more national parks.
— Pro—democracy groups might call for
local participation in land
governance.
international organizations.
- Influenced by ideological grounds (e.g., equality, resource conservation, eta).
- Local community interests will influence
their positions.
International
NGOs
- Rights-based CSOs might push for
additional community rights.
- Conservation C505 might push for
more national parks or other types of protected area.
- Pro-democracy groups might call for
local participation in land
governance.
- Will be influenced by the national
government that funds them.
- Will be influenced by the multinational firms or foundations that fund them.
- Will be influenced by ideological groups
(e.g., other international CSOs}.
- Will be influenced by the needs stated
by local communities.
Diaspora (still living overseas)
- May want to return from overseas and make claims to land that they
They wiH likely make an attempt to work through the legislature or with the President
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think they own (but actually do not) because they hold tribal certificates.
- May want to return from overseas
and make claims on the land that
they used to live on.
- Will likely be surprised that
traditional tenure is being formally recognized pursuant to the draft Land Rights Policy Statement.
5R1 key ministers to oppose certain elements of the draft Land Rights Policy Statement as it is adopted.
Diaspora — May make claims to land that they They will likely make an attempt to work (returned to think they own {but actually do not) through the legislature or with the President Liberia) because they hold a tribal certificate. and key ministers to oppose certain
— May want make claims on the land elements of the draft Land Rights Policy
they used to live on. i Statement as it is adopted. - Will likely be surprised that
traditional tenure is being formally
recognized pursuant to the draft Land Rights Policy Statement because it is a divergence from past practices. Rural Want better treatment throughout the - Influence local C505 and international
communities
process of land rights, administration, management, and dispute processes.
C505. — Have limited influence on the GOL itself,
because they are often marginalized.
Slum dwellers with poor land
tenure
Want better treatment throughout the process of land rights, administration, management, and dispute processes.
— Influence local C505 and international
C505.
- Have limited influence on the GOL itself because they are often marginalized.
b. Economics and Power
This section iilustrates how rents and resources are distributed and received in the land sector and what parties have veto power over reform.
Stakeholder Rents] Resources Distributed and I Veto Power Over Reform?
Received President - Appoints ministers and heads of | Yes
report of other actors.
that is leased.
Executive Branch agencies; receives
— Signs off on sale of public land or land
Land Commission
nation.
Drafts overarching land policy for the
No, but very influential.
MLME
- Responsible for regu!ation and
concessions on it.
management of land that has mining
- Oversees surVeyors, which allegedly
extract illicit payments for services or
No, but has some upward influence on the President.
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falsified deeds.
— Regulates and manages forested
lands and, in the past, have allegedly accepted faisified information to allow logging activities to occur (e.g., PUPS).
— Determines, in part, what revenues
are collected from logging activitieg
NO
Ministry of Agriculture
- Manages land on which agriculture
activities is ongoing, mainly through plantation concessions contracts.
— Oversees FDA.
No, but has some upward influence on the President.
NOCAL
- Regulates and manages lands that
have oil concessions on them.
- Determines — in pa rt — what revenues
are collected from oil extraction.
No, but has upward influence on the President.
MOF Helps to determine government-wide No
expenditures.
Center for National Can extract iHicit payment for filing of i No
Documentation, I false deeds.
Records, and Archives
Minister of Internal Supervises local administrators (counties, | No
Affairs i districts, and chiifi
Large landholders of l None, but can be influential in the I No
20,000 acres or more I executive branch and with the legislature.
Traditional leaders Influence etected officials and their 1 No
constituents.
Foreign businesses None, but can be influential in the No
(Lebanese, Indian, and 1 executive branch and with the legislature.
Chinese)
Multinational Account for a significant portion of GOL | No
Extractive companies 1 revenue overall.
Legislature Adopt laws and approve the national Yes
budget.
Judiciary (Courts)
Decide civil and criminal matters that are
taken to court.
Yes, in some instances they can overturn a decision made by another branch of government
MOJ
Decides which cases to prosecute, especially when fraud is involved.
No
Liberian CSOs
- May draw attention to specific land
issues, which can re5ult in financial costs to the actors involved.
- Can ailocate funding to influence
donor communities, the government, and local communities.
No
International NGOs
- Draw attention to specific land issues, which can result in financial costs to the actors involved.
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- Can allocate funding to influence
donor communities, the government, and local communities.
Diaspora (still living Likely hold deeds or tribal certificates on Some influence on President and overseas) land that will be declared to be under legislature.
customary tenure if the draft Land Rights Policy Statement is adopted; couid seek damages or relief from the government.
Diaspora (returned to Likely hold deeds or tribal certificates on Some influence on President and Liberia) land that will be declared to be under legislature.
customary tenure if the draft Land Rights Policy Statement is adopted; couid seek damages or relief from the government.
Rural communities May create financial issues for extractive | No
industries if their needs are not met.
Slum dweHers with May create financial issues for extractive I No
poor land tenure industries if their needs are not met.
c. History
In several ways, the current condition of the land sector in Liberia is a direct result of the past.
Many land records that existed were damaged or lost during the wars or not filed during those times. The systems necessary to manage them also were destroyed or left in a state of disrepair because investments were not made to improve them over the course of two decades, or because they were deiiberately destroyed.
The end of the war brought many land disputes to the surface. In 2003, the GOL began a policy of return, meaning that internally and externally displaced people were encouraged to return home to their villages. Many returnees came home to find other people living on what they thought was land they owned. The problem continues today as more and more displaced individuals and people from the diaspora return to Liberia because of the country’s relative peace and stability.
d. Social
Several social forces are at play within the land sector. The urban elite versus rural indigenous dynamic has characterized the sector for decades, as described throughout the section above.
Women do not often have equality in terms of land ownership rights. Fewer women own land than men. The Land Rights Policy Statement will protect women’s property rights. In practice, however, they likely will still not be treated fairly by many tribal decision-making processes and will not get fair access to inheritance of property.
Youth often do not own land and are often brought into land conflicts when they arise. Many children
IUULIIUltA-IIUUIluuvIv-Inun.“ . H come from reiationships between men and women who aren’t married or from polygamous relationships. The land inheritance rights of these children are not always clear.
Sensitive But Unclassified (SBU)
e. Corruption
Most interviewees suggested that there are numerous opportunities for corruption in the land sector.
Forged and doctored deeds seemed to be the most common form of fraud, often enabled by bribes to
government employees at lower and mid-levels of the bureaucracy. Sometimes, properties are sold to - - LL- “lam-Win flan by". -...,..-, _- . multiple buyers, based on fake deeds that show a false string of ownership, much to the chagrin of the unknowing buyers. Often, in urban areas, when cases go to court and the appearance of impropriety exists, courts decide in the favor of the original landowners, even if the buyers purchased the property in good faith.
Similar problems involve fake tribal certificates, which are used to show that a rural indigenous population has given its approval to sell a specific piece of land, when it, in fact, has not. This can lead to individuals obtaining a deed based on false pretenses.
Many interviewees suggested that both MLME surveyors and county-level land surveyors frequently take money to legitimize claims for land. Essentially the LGSS Team heard that, for the right amount of money, any type of survey can be carried out and any deed or map documentation can be provided. They benefit
" as . over and over again from transfers of land because they often survey the same property multiple times, getting paid unofficially for it each time. Many interviewees accused the MLME surveyors of using MLME equipment to carry out private surveying jobs.
Still other interviewees suggested that similar issues existed within CNDRA and Probate Courts, stating that CNDRA and Probate Courts often overlook obvious shortcomings in deed documents or actually doctor deeds, in exchange for money.
f. Islands of Integrity
The Land Commission appears to be one of the few government bodies in Liberia that has been able to conceptualize overarching reform involving multiple institutions and articulate it into a clear policy that has a chance at receiving broad-based support. Many interviewees reported that the Land Commission has tried very hard to obtain input from a diverse set of stakeholders. Their work can be a building block for years to come, but it is going to take significant effort, including donor support, to turn their vision into a reality.
Likewise, CNDRA has shown that it can collaborate with USAID to bring about bureaucratic reform. Although much work remains to be done, they have demonstrated progress at scanning and recording deeds and support the formation of a Land ministry or land agency, even though they would report to a different organizational structure.
4. Summary and Action Framework
This section summarizes the main patterns of behavior observed by the LGSS Team in the land sector as they relate to the political economy factors discussed above and proposes a strategy for moving forward. At the end of the section, the LGSS Team provides a matrix illustrating who potentially wins and who loses from these proposed reforms and actions.
a. Patterns of Behavior Relative to the Political Economy
Several patterns of behavior will emerge, based on the political economy conditions described above:
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First, there likely will be some resistance to the passage of the draft Land Rights Policy Statement and the formation of a land ministry or agency:
0 Urban elites and people from the diaspora (either returned or returning), including government
officials, will like resist efforts to recognize customary tenure by law, because they hold deeds or tribal certificates, many of which are fake. Recognizing customary land rights will put those land holdings at risk.
Q Concessionaires and potential concessionaires are also liker to resist efforts to recognize
customary tenure bylaw, because it will limit their ability to carry out activities on land that would legally come under the control of rural indigenous communities.
0 Surveyors in MLME and some within CNDRA may resist formation of the land ministry or agency
and the draft Land Rights Policy Statement, because provisions in both will make it harder for them to take cash for accepting fake deeds, depriving them of illicit revenue.
Q MLME, FDA, MoA, and MIA may resist formation of the land ministry or agency, because they will
lose “turf” to it when it is formed.
However, the LGSS Team believes that there is enough support from the President and other key Ministers for both the draft Land Rights Policy Statement and the formation of a new land ministry/agency that the interests listed above will be overcome.
Second, when adopted, the draft Land Rights Policy Statement is not going to fix historical or past wrongs that have occurred and may, in fact, bring a number of previously dormant ones to the surface. Flashpoints could emerge in several areas:
' Tribal certificates enable a tribe or other party to eventually own land. It is the right to pursue a
deed and not a deed itself. Many individuals think they have a deed when they get a tribal certificate, but they do not, unless they followed the steps described above under "Public Administration Processes.” Nobody knows how many tribal certificates exist, but there are 625 clans in Liberia. If you spent one week at each clan to find the tribal certificates issued there even if you could do that —then the process would take at least a decade. There could be many more in Monrovia and other major cities, in neighboring countries where Liberians fled to during the war, and in the United States, where many Liberians emigrated. As discussed, when these individuals come forward to make claims on land after the draft Land Rights Policy Statement has been adopted into law, they may find that communities or individuals actually own the land they thought was theirs.
0 A similar issue could arise with deeds. Rural indigenous populations will begin to have actual
ownership of land and this will contradict deeds — some legitimate, some forged — that are held by other individuals, including urban elites, members of the diaspora, or other members of their own community.
w............,.
0 Tension will exist within the GOL (e.g., the IMCC, NIC, and the ministries that manage concessions),
because they are going to have increased difficulty doling out concessions on land that is now — in effect — owned by tribes or other private parties because of the draft Land Rights Policy Statement has become the law of the land. The GOL will no longer have total control over the process, as local communities — mostly rural indigenous populations — will have increased ability to use the land as they see fit.
0 These new land rights, as described in the previous bullet, will be a significant divergence from
past practices, and concessionaires and the government wili feel the impact. Mineral rights have
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generally trumped all otherforms of land ownership or concessions in Liberia for decades and they may still continue to do so, depending on how laws regarding subsurface mineral rights are modified as the Land Rights Policy Draft is adopted into law and regulations. The new Land Rights Policy Draft could change that dynamic, because rural indigenous populations might now be able to determine how their land is used, whether it is deeded or not. Because of poor records and information management in Liberia, in some places, it is already not clear whether an area is a concession, a community forest, or private land. As more land becomes private for all practical purposes, concessionaires inevitably will begin to develop land to which they have been granted access by the government, but now is actually owned by tribes or other private parties. The concessionaires can sue, but more likely they will just have to sort it out with the "new" landowners, because the government has demonstrated a profound inability to act properly or serve as an effective intermediary in these circumstances. Some concessionaires have already shown that they are willing to renegotiate boundaries, including Carval, Firestone, Sime Darby, and Golden Veroleum.
0 Legal venue shopping is an issue now and will be a more significant issue after the draft Land
Rights Policy Statement is adopted into law. Urban elites who make claims at the same time as rural indigenous people will have disagreements. The urban elites can afford lawyers and will want to take the dispute to the formal courts; rural indigenous citizens will want them settled by tribal means. The problem can be solved, in part, by improving documentation and processes involved with mediation and providing legal assistance to rural indigenous citizens who find themselves a party to a formal dispute.
0 Liberia also will be undergoing a process of decentralization in the coming years, because it is likely
that a new decentralization law will be passed. It is possible that some functions of the MIA regarding management of chiefs, district commissioners, and land commissioners could change and possibly end up in the new land ministry or agency, or elsewhere. This will likely ca use some turf issues between these entities.
0 As a vision for the new land ministry/agency comes is developed and the provisions of the draft
Land Rights Policy statement are adopted, land ownership, including boundaries, will be documented more effectively and clearly. A number of disputes will arise over new demarcations that have not been formally documented previously: neighbor-to-neighbor, community—tocommunity, and county-to—county. They may take on a political element, because the Liberia National Elections Commission will use population data from these boundaries to inform electoral
processes for years to come.
Third, there will be questions about what should go into the new land ministry or land agency when it is formed. This final point is addressed in the section that follows.
b. Action Framework
There are several steps that can be taken to improve effectiveness in the sector.
Support adoption of the Land Rights Policy Draft into the legolfromework. The draft Land Rights Policy
Statement appears to have broad-based sector support with some opposition. Most interviewees were
positive about it and its chances for passage in the legislature. Several questions will arise as it is adopted
- s L_____..........:+..o . and implemented, many of which have been touched on previously. What constitutes a community? What constitutes a boundary? How will communities determine that? How will it related to decentralization reforms that also are ongoing, including the hereditary chiefta ncy structure? How will rights of the diaspora be addressed?
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USAID is well-positioned to support the GOL as it works through these issues, based on its past successful support to the sector in several ways. The Land Commission already has documented and detailed the laws that need to be changed to adopt the draft Land Rights Policy Statement. They are working to ensure that they know what to do to ensure that old laws are taken off the books or amended properly. USAID could provide continued technical assistance in that effort.
There will be a continuous need to educate the public (rural communities in particular) and the legislature about the provisions of the draft Land Rights Policy Statement as it is turned into law. This might include advocacy and drafting support for the legislature and the Law Reform Commission. Local communities need to understand it, and the Land Cornmission is holding regional workshops to accomplish that. On the whole in Liberia, the government could benefit from assistance that helps them to frame up public policy debates such as this one. USAID can provide technical and material support to those endeavors.
Provide support to the legislative process to ensure that the iaw establishing the iono' ministry or agency is established in accordance with internationai best practices. Many interviewees had suggestions about what functions should be included in the new land ministry/agency when it is formed:
' The new entity needs to include a surveying component that ensures that surveyors are qualified
and certified.
n The new land ministry/agency must have some sort of GlS or mapping component or capability,
for which there presently is very little capacity in Liberia.
e it should have a deed registry management function, which is essentially the role CNDRA plays
now; some interviewees suggested that this function could be contracted out.
t The new body should play a valuation component by determining how land is valued for tax
purposes.
0 There needs to be a liaison function that can correspond with local government as
decentralization is implemented to help local communities set up the local institutions necessary to document land rights appropriately.
0 The new land ministry or agency should have a land use and zoning function.
0 It should have a policy-making function, which may or may not be an evolution of the role that the
Land Commission presently plays.
0 It needs to support dispute resolution (see below).
Support Efforts to Strengthen Dispute Resolutions Institutions and Minimize Fiashpoints. The LGSS Team believes that USAID can provide assistance in two areas: customary and formal.
Customary. As discussed in the “Public Administration Processes” section above, there is a continued need to resolve land disputes in rural indigenous communities. This will be critical in minimizing the flashpoints referenced above. Many structures already exist; USAID should support regional land coordination centers to ensure that people have access to dispute resolution mechanisms when they need them and find ways to expand existing methodologies. It is too expensive to recreate new systems from the ground up.
Formal. The Ministry oflustice wants to establish land courts, because the vast majority of cases in the court system are related to land. From the perspective of international best practice, the LGSS Team believes this is probably not a good idea. USAID should resist efforts to establish land courts for several reasons. The overall court system in Liberia is very weak. Creating a new court system probably isn't going to improve the condition, because it will need training, capacity building, and
equipment; those resources
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probably should be invested to improve the overall court system,
equ.,,........, ...--- , rather than creating an entirely new system. USAID support is better targeted at strengthening the
justice sector as a whole, rather than focusing
on just land. There are questions about how land
imm- - . courts would integrate into the existing court system. For example, if decisions in the land courts can be appealed to the Supreme Court, then there would simply be another bottle neck at that level from the sheer number of cases that will be appealed. Finally, what will happen to the land court, when the caseload goes down once disputes are resolved and improved management
systems reduce the overall number of
The table below explores what parties would benefit from the major
described above.
disputes that originate because of poor documentation?
eiements of the reforms and actions
Possible Reform or Action
Who Wins? Why?
Who Loses? Why?
Adopting the draft Land Rights Policy Statement into Law
- Most Liberians, because
1and tenure can be managed in a more fair, equitable, and transparent fashion.
— The Land Commission,
because it spearheaded the effort.
- Business owners, because
there is a more stable
environment.
- International donors,
because they have been major proponents of the effort.
- Possibly diaspora and urban
elite, because their claims to land through tribal certificates or deeds may be threatened.
- Lower and mid-levels ofthe ministries involved in land management, because they lose official and unofficial
resources.
- Possibly concessionaires,
because more clans and communities will have legitimate rights to land on which concessions exist.
- Possibly high—level officials (e.g., IMCC, NIC, and those involved in concessions), because it will be harder to dole out concessions on land that that rural indigenous communities now have legal claim.
Forming a 1and ministry or
agency
- The President, because it is
her agenda.
- Most Liberians, because
land tenure can be managed in a more fair, equitable, and transparent fashion.
- Business owners, because
there is a more stable
environment.
— Possibly surveyors and
lower-level CNDRA officials, because it will be harder to
gain illicit revenue.
- MLME, MIA, FDA, and MOA, because they will lose turf.
Strengthen dispute resolution mechanisms and minimize
— Rurai communities
— Urban communities
— MOJ, because there will not be a reason to develop land
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flashpoints - Concessionaires courts if disputes can be
Businesses settled through traditional
GOL and customary systems.
---I --I- LAHHJIH- Sv-nm
— Those that benefit from fomenting conflict (e.g., some local political leaders).
- All benefit from reduced
conflict and flashpoints and having their disputes settled in a fair, transparent, and peaceful fashiog
C. Concessions
Concessions are by far the most significant element of the Liberian economy. Some estimates suggest that they have resulted in $16 billion in investment in the country. Yet the sector is played by several fundamental structural problems as discussed in the section that follows.
1. Problem Statement
Iron ore, timber, palm oil, rubber, petroleum, gold, and diamonds could offer tremendous opportunity to Liberians. However, the process of awarding concessions to private companies to use land to explore and extract or cultivate those resources is opaque. Decisions are made by urban elites in Monrovia who do not seek the input of local communities or adequately consider the impact of their decisions on the livelihoods
'" l-Le- "AMP-I'rumau SEEK Lllt: lllpui. uu IULCII L'Ullllllulllyn-J V. , , of citizens in local communities or the environment in which they live. Although the country may benefit as a whole from concessions revenue, many communities in and around concessions do not receive the direct economic benefits of concession revenues or see how concessions revenues benefit them. A few elites benefit financially from the current system. information systems designed to manage information - - ewe-en..- inn.“- Lit-:Hclu. illluuuuuy nu“. u". H... -I _ about concessions lack appropriate data on which to base government decision making; the result is that there are "overlapping" concessions in which multiple companies have claims to the same piece of land, either for the same type of concessions or different ones. These problems are driven by a sense of urgency to improve Liberia's economic condition, almost at any cost.
2. Institutional Governance Arrangements and Capacities
Several institutional governance arrangements and capacities exist within the concessions sector, as described below.
a. Policies Affecting the Sector
Several policies affect the concessions sector. Many of these policies establish government bodies that are supposed to manage or regulate the concessions sector. Although the section below discusses the policies themselves, the section that follows, titled "Relevant institutions,” discusses the relative effectiveness of the management and regulatory bodies and whether or not they follow provisions of applicable law.
Liberia Extractive industries Transparency initiative (LElTi) Act of 2009. This Act legally requires the GOL to show the types of revenues that are raised from extractive industries and in what amounts. Liberia’s law is unique because, unlike ElTl initiatives in other countries, it also addresses revenues from agriculture and forestry.
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Public Procurement and Concessions (PPC) Act of 2005 and amended in 2010. This Act sets forth the processes to be followed when the GOL purchases goods or services or allows private interests to extract natural resources or utilize land for cultivation of rubber or palm oil. The amendment to the Act establishes a road map for a competitive process of bidding out concessions. It creates the Intere Ministerial Concessions Committee (iMCC) as the primary body responsible for negotiating concessions agreements with support from appropriate line ministries and agencies. it also creates a Public Procurement and Concessions Commission (PPCC) that is supposed to ensure that the competitive processes are followed.
National Bureau of Concessions (NBOC) Act of 2011. This Act establishes the NBOC to provide technical assistance to the lMCC and monitor and review concessions contracts to ensure compliance with concessions agreements, including examining whether or not that concessionaires are paying appropriate taxes and fees revenues to the GOL. It also may recommend the renegotiation of agreements that do not present favorable terms for the GOL.
National Oil Company of Liberia Act of 2000. This Act establishes the National Oil Company of Liberia (NOCAL), the primary body that regulates oil exploration, assists in the process of negotiating contracts, and will manage revenues once oil production begins.
Petroleum Low of2002. This law provides a framework for the negotiation of oil contracts through NOCAL. The GOL currently is reviewing the law to ensure that it provides appropriate benefits to Liberian individuals and companies.
Minerals and Mining Act onOOO. This Act states that the government owns minerals and is entitled to receive revenues from their extraction. It establishes processes and policies for different types of mining, including environmental considerations, like environmental impact statements. It establishes different classes of mining licenses (e.g., Class A, Class B, Class C, artisanal, etc.).
National Forest Reform Law of 2006. This Law states that the government owns forest resources and gets revenues from their extraction. It establishes "Protected Areas” that cannot be logged and processes and policies for four different types of logging, including:
- Private Use Permits (PUPs). PUPs are a provision that allows private owners of forest land to make
commercial use of the forests. The practice has been abused, often through forged documentation and deeds, and is highly controversial. At present, there is a ban on issuing PUPs or cutting down trees under the auspices of PUPs in Liberia.
Ul LUILLHUB MUIIII vu...--- ____ _ I - Timber Soles Contracts (TSCs). TSCs allow the GOL to enter into a contract with private companies
to remove trees from small areas (less than 5,000 hectares) of public land.
- Forest Management Contracts (FMCs). FMCs ere concessions agreements for public land up to
400,000 hectares.
llcuuulua. - Forest Use Permits. Smail permits for charcoal, tourism, research and education, small iocally used
timber and non-timber forest products (NTFPs)
Community Rights Law of2009. This law applies only to forest lands and allows communities to manage and commercialize the forests. If a community chooses to engage a private company for a large-scale commercial contract, then the community is entitled to 55 percent of the revenues/income generated from the transaction. The law is not fully implemented or utilized, meaning that only a few communities have set up the structures and management processes necessary manage the forests. At the same time,
lluvc. JbLurJ um. .n................ v the land that is supposed to be managed by the community is often granted to concessionaires.
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b. Relevant Institutions
This section describes the role, strengths, and weaknesses of specific ministries, parastatals, offices, civil society organizations, the private sector, and others involved in the concessions sector.
President. Appoints members to the Inter-Ministerial Concessions Committee (IMCC) and to the ministries and agencies that regulate concession agreements once they are in place (e.g., MLME, FDA, MOA, etc.) She ultimater signs concession agreements.
Legislature. The legislature ratifies concession agreements, so they have the force of a law, unlike in many other countries. The legislature often changes aspects of the concessions agreements to suit their own political or financial ends leg, adding additional infrastructure in their districts, slanting the terms of the “new”. . V, H agreement toward business or industries in which the legislator has a financial stake, etc). Legislators and their staff members lack the technical understanding necessary to make such changes in the concessions agreements, mostly because they appoint family members and cronies to staff positions regardless of their skill sets. Some members of the legislature are illiterate.
IntereMinisteriol Concessions Committee (lMCC). IMCC negotiates the concessions agreements. The President convenes a session of the IMCC to negotiate a specific concessions agreement, which is headed by the Chairman of the NIC and includes other high-level officials, mostly at the minister or agency-head level, as discussed below under "Public Administration and Policy Processes.” A large number of interviewees criticized the IMCC for a lack oftransparency in its decisionwmaking and a failure to address the needs and concerns of local communities. Others suggested that it does not have access to the technical information necessary to make sound decisions.
National investment Commission (NIC). The chairperson of the NIC always serves at the head of the IMCC, thus ensuring that the llVlCC has a political orientation and is concerned primarily with economic growth.
Ministry of Land, Mines, and Energy (MLME). MLME plays several roles related to mining of iron ore and prospecting of gold, diamonds, and other minerals. It is involved in the negotiations process as described above, manages the concessions agreementonce it is in place and is responsible for technical oversight and regulation of the concessions agreement. Many interviewees suggested that MLME lacks technical capacity as a whole and is incapable of effectively overseeing many concession agreements. At present, with support from GIZ, MLME is pushing for a concessions cadastral system that is not compliable with ARC-GIS, the software that most cadastral systems use. As a result, their system will not be able to interact or share data with systems that other ministries and agencies will develop in the coming years, most of which will rely on ARC-GIS.
Ministry ongriculture (MoA). MoA plays several roles relative to palm oil and rubber cultivation. It is involved in the negotiations process as described above, manages the concession agreement once it is in place, and is responsible for technical oversight and regulation of the concession agreement. Many interviewees agreed that MoA lacks the appropriate resources and capacity to effectively carry out its duties.
Forestry Development Agency (FDA). FDA plays several roles relative to logging. It is involved in the negotiations process, as described above, manages the concession agreement once it is in place, and is responsible for technical oversight and regulation of the concession agreement. it also carries out a similar role for TSCs and PUPs, managing and overseeing the process of granting those agreements. Many
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interviewees, including the FDA itself, suggested that FDA does not have the resources or skills to manage or protect forests in Liberia.
National Oil Company of Liberia (NOCAL). NOCAL plays several roles relative to oil exploration and extraction. It is involved in the negotiations process as described above, manages the concession agreement once it is in place, and is responsible for technical oversight and regulation of the concession agreement. At present, NOCAL oversees the process of negotiating with companies seeking access to explore and extract oil from offshore blocks. Many interviewees criticized NOCAL for a lack of transparency in that process.
National Bureau of Concessions (NBOC). This newly formed body is mandated to act, in essence, as the technicai arm of the IMCC providing information to aid in the negotiation process, such as the quality and extent of extractive resources, financial analysis, and evaluating social impact on local communities. NBOC also will be responsible for monitoring and reviewing concession contracts to assess compliance with
'' I l - 24 l.‘ t...” H- v concessions agreements and to ensure that concessions revenue are being appropriately paid to the GOL. It also may recommend the renegotiation of agreements that do not present favorable terms for the GOL. At present, the role of the NBOC relative to the relevant line ministries and agencies that manage
concessions contracts is still being worked out. interviewees, including those from the NBOC and the line ministries, did not understand what functions are to be carried out by each, since the line ministries and agencies already are tasked with executing many of the same tasks that NBOC will be carrying out. The IMCC itself is not clear on what the NBOC's new roles and responsibilities will be, because it already works with line ministries and agencies on many of those tasks, even though those efforts are not as productive as they can be, because of capacity issues.
Public Procurement and Concessions Commission (PPCC). Even though it is required by law to ensure that the concessions process is carried out in accordance with the PPC Act, the PPCC essentially plays no role in this process, choosing only to focus on the procurement aspects of its mandate. For example, PPCC currently has 17 technical professionals focused on procurement issues and not a single staff member dedicated to concessions.
Ministry of Finance (MOF). The MOF is a member of the IMCC when sessions are convened and provides financial modeling and analysis support to the process. Some interviewees suggested that the MOF could improve those skills. In addition, the MOF is the entity of the GOL that receives payment of taxes and fees associated with concession activities. Many interviewees suggested that those revenues are not always collected in a timely and efficient manner.
Ministry ofJustice (MOJ). The M01 is a member of the IMCC when sessions are convened and provides legai advice and support to the process. Some interviewees suggested that MOJ could improve those inputs to better protect the interests of the GOL.
Traditional leoders. Traditional leaders include paramount, clan, and town chiefs, as well as others that play an influential role in rural indigenous communities, such as Poro and Sandi leaders. Concessionaires often negotiate with traditional leaders to obtain access to a particular geographic area or to quell
-- um... new..-“ concerns from communities at large about concession activities. Traditional leaders often do not understand how valuable particular natural resources are and do not negotiate fair and equitable arrangements for the communities they represent. They often are “bought off" will small amounts of money or inexpensive goods, like motorbikes.
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Minister of Internal Affairs (MIA). The MIA oversees the chiefiaincy structure of local governance in Liberia. 0n the whole, it has a very limited or no ability to support chiefs when they come to the negotiating table with concessionaires.
Multinational extractive companies. The country-level analysis section at the beginning of this document lists a number of multinational companies that extract natural resources from Liberia. On the whole, multinational extractive companies have far more resources and capacity than the GOL and therefore are better suited to negotiate for their own interests during the concessions process.
Judiciary. Ultimately, the judiciary is responsible for resolving disputes that arise between concessionaires and the GOL. However, because the judiciary is so weak, less than a handful of cases have ever actually
gone to court.
Rural communities. Rural indigenous communities are impacted the most by concessions activities, yet have little say in how agreements are negotiated and then managed. Per the PPCC Act, concessionaires are required to contribute to Community Development Funds (CDFs) and the GOL funds Social
- I Vol.5-.- dlCICLlUiICu LU bUIILlll-luuu u. uv......_...-, a e I 7 Development Funds (SDFs), which provide financial support for health, education, infrastructure, and other projects that benefit rural indigenous populations. Both CDFs and SDFs have committees by which local communities have say in how funds are spent, such as County Development Steering Committees, Dedicated Funds Committees, and Project Management Committees; these vary according to the
--- UCUILdLCu ruliua o...“ . "an iv concessionaire and the geographic location. In reality, these funds and committees rarely function and do not allocate resources effectively. For example, some concessionaires have set aside millions of dollars, which have not been spent because community members and government officials cannot agree on priorities.
Global Witness. Global Witness is a U.K.—based international NGO that does not have a presence in Liberia, but has been instrumental in drawing attention to issues of inequity and environmental degradation in the forestry sector, such as abuse of PUPs, similar issues in the palm oil sector, and, to a lesser extent, “blood” diamonds.
Sustainable Development Institute (SDI). SDI is a Liberian CSO that carries out advocacy and monitoring for sustainable development practices in natural resources. it is focused mostly on forestry and to a lesser extent on palm oil on iron ore.
Center for Transparency in Liberia (CENTAL). CENTAL carries out monitoring, advocacy, and community engagement programs for natural resource governance.
Liberia Extractive Industries Transparency Initiative (LEITI). LEITI takes steps to report the types of revenues that are raised from extractive industries and in what amounts. At present, the GOL does not follow the law, often refusing to turn over key pieces of data that would enable LElTl to carry out its role as prescribed by the law.
Publish What You Pay Liberia (PWYPL). PWYPL has been advocating for applying a model minerals development agreement (MMDA), which is not used at present. Adoption ofa MMDA would require each company in a given sector to essentially the same agreement, including standardizing the rates each
''""-- Lew-- rnnrlii'innc nF ngm LLUillpcllly Ill Cl SIVCII album.“ u, homunn...’ U company pays to the government. The MMDA also would spell out the terms and conditions of payments the companies must make to social development funds. PWYPL has developed draft MMDAs, but none have been formally adopted.
Sensitive But Unclassified (SBU)
c. Public Administration and Policy Processes
The institutions above are involved in several public administration and policy processes. On the whole, these processes are controlled by elites at the highest levels of government, are poorly coordinated, do not follow applicable law, negatively impact indigenous rural populations, and deprive the GOL and Liberian citizens of revenues and benefits to which they should be entitled.
Negotiating ond Awarding Concessions. Although the PPC Act calls for concessions to be awarded through
competitive processes, they, in fact, are not. Shortly after the current administration came to power,
many concessions were negotiated directly with the President’s Office. After the PPC Act was passed, the
- - -- ------+A um» unr-l-nH in Hm; mmIIIGIIY II'HIU ---Dv\.....-v_. _... . I process decentralized slightly, as authority for negotiating concessions agreements was vested in the IMCC headed by the NIC. However, the process has a number of shortcomings related to the political economy, which can be understood only by examining them in greater detail.
In theory and according to the law, the GOL should be identifying potential concession areas and bidding
0ut those opportunities to potential concessionaires. In some sectors, like offshore oil, the GOL does
competitively bid out opportunities. The GOL believes oil exists, because blocks in the ocean have been "'' - - - an"! in 1-han LUIIIPCLILIULJ, VUII- identified, surveyed, and demarcated. The GOL then sells out the rights to explore and extract in those blocks to the highest bidder or the one that offers the best overall terms. Likewise, in the mining sector, the GOL might know that minerals are present in a particular geographic area because ofthe existence of mines, abandoned during the war. In these situations, they may competitively bid out a mining concession.
However, in most sectors, the process works much differently. Competitive bidding for concessions'is not the norm. For the most part, the reality is that concession negotiations are initiated and driven by the concessionaires themselves and not by the GOL. For example, for gold, diamonds, and iron ore, companies first ask for an exploratory rights contract with MLME; these contracts are not competitively
- -- - "Hm- ...i..:..|n mm, n, mm, nn con-pa...“ ...st......._. m. ...p... , issued. If they then find minerals, then they seek a concession through the IMCC, which may or may not be done competitively. These exploratory rights are often sold between companies. Likewise in palm oil or rubber, private companies identify large swaths of land that have plants on them or are suitable for cultivation and then negotiate with the IMCC to be granted exclusive access to those areas.
For each concession that is negotiated, the same basic process is followed after the potential concessionaire has reached out to the GOL or after a competitive process was executed:
First, the President convenes a session of the IMCC which includes: (1) the NIC Chairman, who serves as the chair of the session; (2) the head of the relevant ministry or regulatory agency which should be involved depending on the sector (MLME for minerals, FDA for forests, NOCAL for oil, MoA for palm oil and rubber, etc.); (3) the Minister ofJustice; (4) the Minister of Finance; (5) the Minister of Pia nning and
- - -- i.- in iuuuci, we. "ll-"ow. v. ., . Economic Affairs (a position which will be dissolved soon as the function of that ministry is folded into the Ministry of Finance); and (6) two additional members designated by the President, who normally are drawn from ministries or agencies that are relevant to the concession that is being decided (e.g., Ministry of Labor forjobs). In addition to those members involved in a particular session, the iMCC also has a small permanent staff responsible for administration of the process.
Second, the IMCC then forms an inter‘Ministerial Technical Committee (lMTC), composed of lower-level technical experts and managers from the ministries and agencies that comprise the lMCC session, as well as some deputy ministers. These individuals provide the technical expertise necessary to negotiate the concession, such as estimates of resource size and quality, financial analysis and modeling, or legal expertise.
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Third, the lMTC works with the relevant ministry or agency to draft a concession agreement, using a model agreement developed previously. The tMTC and the relevant ministry agency might change a variety of aspects ofthe model agreement, including environmental clauses, arbitration procedures, fee structures,
- - I s If “you--. , v or time period of the concession (e.g., 25 or 50 years). Each agreement also includes clauses stating that the concessionaire must make certain contributions to SDFs which are used by the GOL to fund investments in the community impacted by the concession. These might include schools, health facilities, latrines, roads, housing, or a host of others.
The IMCC reviews that draft ofthe agreement, makes changes, and then sends it onto the concessionaire. The concessionaires, the IMCC, and the iMTC come together in a face—to-face negotiation, with both sides at one table. These negotiations normally take place through a series of meetings that last several hours and are held over the course of weeks or months. Often, additional one—on—one meetings between members of the MU: or IIVlTC and the representatives of concessionaires take place away from the large group negotiations. None of the proceedings of any of these meetings are made public, nor are they open to the media or civil society organizations. Many interviewees suggested that opacity in the process of negotiating these agreements allows corruption to occur at all levels, ranging from simple envelopes of money being passed to more complicated arrangements in which officials are given an ownership stake in the concession and receive profits over the longer term.
The M01 is responsible for making changes to the draft agreement once negotiations are complete. The legislature then ratifies the agreement. Some interviewees noted that the legislature makes changes to the agreement entirely unrelated to the previous negotiations which have taken place. These changes
' - - ...._ v often alter the concession agreement in favor of the county that the legislator represents (e.g., by bringing more resources into the area) or benefit the legislator personally (e.g., by supporting an industry in which he or she has an ownership stake or financial interest).
Before extraction or cultivation begins, concessionaires must follow a variety of additional steps. These are regulated by the relevant line ministry or agency, as well as the Environmental Protection Agency (EPA). Concessionaires must complete an environmental and social impact assessment (EISA), which examines the concession's potential impact on environmental quality and social dynamics in the geographic area we Wuccsmw. - WWW“. _ _ where the concession is located. Concessionaires must also complete a feasibility study that examines the viability of the overall concession and the related investments that will need to be made (e.g., roads, facilities, etc). Concessionaires also need to develop and file an overall work plan that includes milestones and extraction or cultivation targets. However, all ofthese actions are only required to occur after the concession agreement is negotiated and ratified, so they amount to a "rubber stamp" to an existing law.
Overlapping Concessions. The processes of negotiating and awarding concessions and regulating concessions should rely on information management platforms and information sharing among IMCC and the relevant line ministries and agencies. In reality, they do not. Although some ministries (e.g., MLME) have outdated or nascent cadastres, the GOL does not have a government-wide GlS-based mapping capability or a cadastre that shows land use designations, presence of minerals, ownership rights, concessions rights, or other similar characteristics. Few reliable maps exist. Different ministries do not communicate with one another when negotiating and awarding concessions.
As a result, concessions or management rights have been granted to multiple organizations (e.g., - I-- use,
Inaun.’ .- , v i companies, communities, private landowners, etc.) for the same extractive or cultivation industry on the same tract of land, or to multiple organizations for multiple extractives or cultivation industries on the
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same tract of land. These overlapping concessions and conflicting land use designations are commonplace as the GOL makes uninformed decisions, based on incomplete and inaccurate data.
For example, many interviewees told the LGSS Team about instances in which the same geographic area has multiple concessions on it, meaning that multiple companies have been granted the seemingly exclusive right to extract or cultivate in a given place. Likewise, other areas are supposed to be regulated as community forests, but concessions have been granted on them, directly contradicting the community's legal right to manage the forest for their own purposes. Similarly, concessions are granted on land that is supposed to be protected for nature preserves or parks.
The concessions are often granted without regard to what activities and structures presently are on a given piece of land. For example, extraction or cultivation cannot occur on many concession areas, because people already live there, large human settlements are in place, or because other business activities already occur on it.
In these instances, concessionaires and other parties involved generally work these issues out with one another, but they could sue the government, at least in theory. However, because the capacity is so low in the judiciary and the judiciary is so unpredictable, this rarely occurs. In fact, the LGSS Team heard of only a handful of instances in which concessionaires or other parties attempted to use the court system.
Regulating a Concession and Collecting Concessions Revenues. Poor information sharing and management makes it extremely difficult for the GOL to actually regulate concessions, if officials do not know what activities are supposed to be happening and where. For example, regulators cannot calculate the potential revenue or fee value of a particular area, if they do not actually know how large the area is, what the quality of the mineral or soil is, how much of the area is usable, or a host of other factors. As a result, the GOL has difficulty collecting the taxes and fees that it should be entitled to. Overall poor financial management systems, under-resourced ministries and agencies, and a profound lack of skills exacerbate 7 _e. . the problem, resulting in weak enforcement and monitoring of concessions. The GOL does not know how much money it should be collecting. When it does know, it is often incapable of collecting the revenue. For example, according to 565, some estimates suggest that logging concessionaires alone owe the GOL more than $34 million.
Community Relations. Rural indigenous populations have little or no input into the process of negotiating, awarding, and regulating concessions, which is carried out almost exclusively by elites. At the same time, those processes are fraught with information management and decision-making challenges. Local communities often bear the brunt of those two factors.
Communities often have to move or be relocated because of the activities of a particular concessionaire. if communities do not pack up and go, concessionaire activities affect livelihoods and the natural environment by contaminating water sources, creating other forms of pollution, damaging sacred or religious areas, causing erosion, limiting hunting and fishing opportunities, taking up grazing and farming land, or a host of other deleterious effects.
In reality, communities have little practical recourse when this occurs. They do not understand the legal system, nor can they afford to seek reimbursement for damages. Often, their grievances cause them to take physical action or violence, such as blocking a road and prevent the concessionaire from removing logs or minerals. in some instances, concessionaires will listen to the complaints of a given community
mo. -. ........._.-. . , and adjust their operations accordingly. Because the GOL lacks any practical ability to intervene, issues
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have to be resolved between the concessionaires and local communities, even though the agreement is between the GOL and the concessionaire.
Many communities are generally very excited about a concession happening in their area, at least initially. They like the promise of jobs and economic activity. But many communities aren't happy with the quality or numbers of jobs. Often, technical and managerial positions go to individuals from other communities or countries, because local populations lack skills and training. Generally, concession agreements also call for concessionaires and the GOL to contribute to SDFs and CDFs to support Infrastructure investments in communities, but communities often do not see any benefit from them. A few formal bodies are supposed to functions to give communities a voice in how SDF and CD? funds are spent. These include Dedicated Funds Committees, County Development Steering Committees, and Project Management Committees, which are often formed at the local level and should include representatives from the concessionaire, the local community, and the GOL. In theory, they are supposed to decide how SDFs and CDFs are spent. The reality is that it is very difficult to spend the money, because the different parties involved rarely agree on what the priorities are. Concession agreements do not generally have sufficient detail to delineate spending priorities, so there often are significant delays in making investments that benefit the communities. In some instances, the funds are never spent.
In addition, other efforts are established to share benefits with local communities but do not function because of a lack of political will. For example, in the logging sector, the National Benefit Sharing Trust is supposed to receive 30 percent of all fees from land use permitting and leasing fees. Yet the Trust is not operational, because the (30L has not allocated those fees to it, nor can it account for them.
The Impact of the GOL’s Information Management and Decision-Making on Concessionaires and Community Relations: The Example of Western Cluster
Western Cluster is a concessionaire granted rights to three iron ore mining sites in Liberia: Mano River. Bomi, and Bea Mountain. Its experience at two of those locations is indicative of the challenges facing many concessionaires in Liberia that arise when the GOL makes decisions without reliable data or considering the impact of their decisions on local communities.
The Mano River site was previously mined, but operations ceased and the mine was shut down in 1984. Western Cluster‘s concession agreement with the GOL includes 148 km of railway that connects the Mano River mine with the Freeport of Monrovia. However, the GOL granted the concession even though there are 1,408 structures within the railway easement that people have constructed as homes. To make the railway usable once again, Western Cluster is relocating and compensating the individuals who lived in the easement.
The Bomi mine also was previously mined and abandoned in 1976. It is located on government land. Within the
concession area, several other government activities are ongoing and permanent structures have been built,
including a Ministry of Defense base, a MoA stockyard, local government housing, a National Elections Commission
- -- A -_...__.......-i 1....tmmtnlflu'minn elatinriq and lllUlUUllig d IVIllllauy un ucmuau u "w. - “w...” ... a office, a central bank office, and a Liberia Broadcasting Company radio tower used by four television stations and UNMIL. Western Cluster is figuring out how to cohabitate with these government entities, working their operations around them. In some instances, this just cannot be done. For example, the radio tower is right in the area where minerals will be extracted, so they are working with the GOL to remove the tower.
At present, Western Cluster has paid several million dollars into SDF and CDFs which, in theory, should benefit local communities. None of this money actually has been spent, however, because communities cannot agree on how to spend l
3. Political Economy Drivers
Several elements drive political economy in the concessions sector, as discussed below. This section
sen...“ MUM...“ ....._ , discusses stakeholder incentive, interests, and influence; examines political economy drivers, such as the rents and resources distributed and who has veto power over reform; looks at the social and historical
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context of the sector; identifies the areas most prone to corruption; discusses islands of integrity that USAlD can work with; discusses of how the sector's political economy leads to specific behavior; and proposes an action framework, including a discussion of who wins and who loses from the proposed
reforms and actions.
a. Stakeholder Incentives, Interests, and Influence
This section describ or hinder reforms in the concessions sector.
es the incentives and interests of each ofthe institutions and stakeholders to promote
It considers political spheres of influence, relationships, and
alliances.
Stakeholder Interests/Incentives Exert Influence On? Receive Influence
From?
President - Wants to see increased - Exerts influences on decisions made
economic activity and revenue by the IMCC.
generation through award and - influences members of the iMCC, management of concessions because she appoints them. contracts. - Influences line ministries that - Wants to see processes of regulate concessions, because she
concessions be awarded quickly appoints senior leadership. and efficiently with little - May be influenced upward by interference from local members of her own cabinet. communities or actors - Influences concessionaires representing their interests. l themselves and, at the same time,
can be Influenced by them. - Has less influence over tribal
authorities, but can potentially influence tribal authority, because chiefs are managed through the Ministry of internal Affairs.
- Has less significant influence over the courts; courts have shown that they will overrule in certain instances, even though they remain weak. NlC - Wants to see increased - As the chair, it influences decisions of economic activity and revenue the IMCC. generation through award and - Influences concessionaires management of concessions themselves and, at the same time, contracts. can be influenced by them. - Wants to see concessions
awarded quickly and efficiently
with little interference from local
communities or actors representing their interests.
IMCC - Wants to see increased Influences concessionaires themselves
economic activity and revenue and, at the same time, can be influenced generation through award and by them. management of concessions
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contracts.
- Wants to see processes of
concessions be awarded quickly and efficiently with little interference from local
communities or actors representing their interests.
Wants to play two roles: (1) providing technical assistance and advice through the award of concessions contracts, and (2) reviewing concessions contracts to ensure compliance with provisions
Could exert influence on the MIC, IMCC,
and concessionaires, but presently lacks the politicai backing and resources to do
so.
Essentially wants to stay out of the concessions arena, despite its legal mandate to regulate the sector.
Influenced by President, key ministers, and legislature through budgetary and political pressure not to play a regulatory role in the concessions process.
MLME
- Wants to see increased
economic activity and revenue generation through award and management of concessions
contracts.
— Receives licit revenue from the concessions and regulations process; also may receive illicit
revenue.
— As a regulator, influences
concessionaires themselves, but, at the same time, can be influenced by
them.
- ls influenced by the President
because she appoints their key leadership.
— Influences decisions made by lMCC
because they sit on the panels.
- Wants to see increased
economic activity and revenue generation through award and management of concessions contracts.
- Receives licit revenue from the concessions and regulations process; also may receive illicit
revenue.
— As a regulator, influences
concessionaires themselves, but, at the same time, can be influenced by
them.
- ls influenced by the President,
because she appoints their key leadership.
- Influence decisions made by IMCC
because they sit on the panels.
- Wants to see increased
economic activity and revenue generation through award and management of concessions contracts.
- Receives licit revenue from the concessions and regulations process; also may receive illicit
revenue.
- As a regulator, influences
concessionaires themselves, but, at the same time, can be influenced by
them.
- ls influenced by the President,
because she appoints their key leadership.
- Influence decisions made by IMCC,
because they sit on the panels
NOCAL
- Wants to see increased
economic activity and revenue generation through award and management of concessions
— As a regulator, influences
concessionaires themselves, but, at the same time, can be influenced by
them.
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contracts.
- Receives iicit revenue from the concessions and regulations process; also may receive illicit
revenue.
- 15 influenced by the President,
because she appoints their key leadership.
- Influence decisions made by iMCC
because they sit on the panels.
MOF - Wants to see Increased - As a coilector of revenues, influences
economic activity and revenue concessionaires themselves, but, at generation through award and the same time, can be influenced by management of concessions them. contracts. l - ls influenced by the President
— Receives licit revenue from the because, she appoints their key
concessions and regulations leadership. process; also may receive illicit - Influence decisions made by IMCC, revenue. because they sit on the panels.
M01 Wants to see increased economic 1 Influence decisions made by IMCC
activity and revenue generation through award and management of concessions contracts.
because they sit on the panels.
Ministry of Internal Affairs
Wants to see the interests of chiefs represented in the concessions contracts process.
- influences chiefs, but aiso receives
influence from them.
- Can influence other ministerial
leadership and Presidelt
Traditional leaders
Want to see local communities benefit from concessions and not be negatively affected.
- Can influence ministerial leadership
and president, but can also influence them.
- Often receive benefits from
concessionaires and, therefore, are influenced by them.
Multinational — Want to make money. Can influence members of the IMCC, but Extractive Want to avoid local communities also can be influenced by them. companies I that will negatively affect their
operations. Legislature - Wants to see increased | Influence concessionaires and are - --
economic activity and revenue generation through award and management of concession contracts.
— Receives licit revenue from the concessions and regulations process; also may receive illicit
revenue.
influenced by them throughout the process of ratifying concessions agreements.
Judiciary (Courts)
Want to see concession contracts
enforced.
In reality, have little influence on the concessions process because of lack of capacity.
Liberian CSOs
- CSOs might push for increased
community rights in the process of awarding and managing concessions.
Influenced by rights'based
international organizations.
- Influenced by ideological grounds
(e.g., equality, resource
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They also may want to increase transparency in the concessions award process.
conservation, etc).
Local community interests will influence their positions.
Have limited, if any influence on the IMCC and ministries involved in regulating concessionaires.
international NGOs | -
They might push for increased community rights in the process of awarding and managing concessions.
Conservationist NGOs might push for more protected areas where concessions shouid be avoided all together.
Will be influenced by the nationa1 government that funds them.
Will be Influenced by the multinational firms or foundations that fund them.
Will be influenced by ideological groups (e.g., other international NGOs).
Will be influenced by the needs stated by local communities.
Have limited, if any, influence on the IMCC and ministries involved in regulating concessionaires.
Rural communities | -
Want to receive benefits from concessions agreements, such as jobs.
Generally do not want to be negatively impacted by concessions.
Have some influence on local traditional leaders and chiefs, but very little influence on higher levels of government. ' Can influence concessionaires by creating obstacles or conflict that hinder their operations.
