Public Corporations—the Best Way Forward for Effective Operations and Management

“Even if I were to die today and were to go to heaven and God was to say to me, I want to send you back on earth but this time, I will send you as a White Man. I would tell God, I agree for you to send me back, but not as a White Man for I have a job to do that NO WHITE MAN CAN DO.”

The above quote is from the last speech delivered by Professor James Emman Kwegyir Aggrey to his students at Achimota College in Ghana in 1927 just before his departure to the United States of America. Unfortunately, he never returned alive. He died in the United States of America.  Professor Aggrey is often referred to today as “Aggrey of Africa”.

In that audience in 1927, among the students was Kwame Nkrumah, who later became the Prime Minister of Ghana and later President of Ghana.  Other Africans that he influenced and who later became head of states of their respective countries were Dr. Hasting Kamuzu Banda of Malawi, and Dr. Nnamdi Azikiwe of Nigeria.

As you read this feature, we advise you to keep the above quotation in mind.

History of Public Corporations in Liberia

Before 1973, public services in Liberia were provided by the Public Utilities Authority, which then comprised of the Departments of Works and Utilities (Electricity, Water and Sewer, Telecommunications and Radio Broadcasting). The Department of Public Works was headed by a Secretary and the Utilities Section was headed by a Chairman. Under this arrangement, services were poor, unreliable, poorly managed and ineffective. The Utilities were a burden to the government because the government provided a budgetary allocation to each to sustain them.

In an effort to improve efficiency and provide reliable services, the late President William Richard Tolbert Jr. an Economist decided to revisit the Act of the Department of Public Works and Utilities.  In his wisdom, he believed at the time that if separated, they would be effective and better managed. In 1973, he submitted an Act to the Liberian Legislature, amending the Department of Public Works and Utilities for the creation of the Ministry of Public Works, the Liberia Electricity Corporation (LEC), the Liberia Water & Sewer Corporation (LWSC), the Liberia Telecommunication Corporation (LTC) and the Liberia Broadcasting System (LBS). The creation was not only to improve public services to the population of the country, but to also reduce government subsidies to them.  For the purpose of this feature, we will focus on the Liberia Electricity Corporation (LEC) and the Liberia Water and Sewer Corporation (LWSC).

Mandates of the 1973 Act

1. To produce/supply economic and reliable services to the entire nation
2. To ensure  the financial viability of the corporations

Intrinsic in the mandate is the responsibility to constantly improve and expand the corporations’ infrastructural systems to meet current and future demands, including demands for economic and industrial growth in the nation. Because of the above mandates of the corporations, they were charged with the following discrete responsibilities:

1. Ensure efficient, reliable and affordable services are available 24/7
2. Strive to meet the increasing demand of the population, industries, schools, health facilities, etc.
3. Services provided should serve as catalyst for socio-economic development of country.
4. Finally, the corporations if properly manage, they would be sources of government revenue. They would pay various types of taxes such as customs, duties, value added tax, excise duty, income tax, etc.

In addition, it was the President’s dream that these Corporations, if effectively managed, could contribute to the government’s National Budget.

 Between the periods July 1973 to April 12, 1980, just before the Military Coup d’ etat that killed President Tolbert, most of these Corporations were doing far better than they were doing before they were separated and much better than they are today. 

It is now over 51 years since the Public Works and Utilities Act was amended and in reviewing the performance of these Corporations, we are disappointed. The result showed that President Tolbert’s dream of reliable, efficient and sound Public Corporations seems utopian.  Today, the public services are poorly managed and unreliable, and these Corporations are unable to sustain themselves. They cripplingly depend on government subsidies and even when the subsidies are provided, they end up in the pockets of the management teams. 

During the senseless civil crisis, many of the infrastructures and equipment used to provide the services were damaged and coverage of services was reduced to the lowest in the country. Looking back in time at the capacity of these corporations, we found that the Liberia Electricity Corporation pre-war power generation capacity was 191 megawatts (Mount Coffee 64 megawatts and others 124 megawatts) and Monrovia and ten other urban cities had electricity. The Liberia Water and Sewer Corporation’s treatment and transmission capacity was 28 million gallons per day or 112, 000 cubic meters per day (White Plains-designed capacity 16 average/ designed 24 million gallons per day and the 8-county’s capitals treatment systems 4 million gallons per day).

When the Unity Party Government was inaugurated in January 2006, the LEC generation capacity had reduced to 5 megawatts per day and the LWSC treatment and transmission capacity reduced to 0.70 million gallons per day or 2,800 cubic meters per day and all urban cities outside of Monrovia that were originally supplied pipe borne water no longer had a service. Within 180 days, the LEC generation capacity was increased to 25 megawatts and LWSC treatment capacity was increased to 4.5 million gallons per day or 18,000 cubic meters per day. Interestingly, the LWSC never requested salary support from the government unlike other public corporations. These corporations improved and sustained the services at 18 hours daily and 60% of those who received the services were paying for the services rendered them. By December 31, 2017 the generating capacity of the LEC had reached 126 megawatts (Mount Coffee 88 megawatts  Bushrod plant 38 megawatts), and the government negotiated for 50 megawatts from Transco CLSG from the Ivory Coast, for a total capacity of 176 megawatts.  In the case of water supply, a total capacity of 30 million gallons per day (designed capacity of White Plains 24 million gallons per day and two satellite systems -Soul Clinic and New Georgia 1 million gallons and 5 million gallons per day from six rural cities) was available by December 2017.

Surprisingly, within six years, the capacity of LEC reduced to 41 megawatts (22 megawatts from Mount Coffee and 19 megawatts from Bushrod). The demand for Monrovia and its environment, on the other hand, is approximately 50 megawatts. In the case of the LWSC, the treatment capacity reduced to 12 million gallons per day (9 million gallons per day from White Plains and 3 million gallons per day from rural cities) due to poor maintenance of the equipment and non-availability of treatment chemicals and fuel. Additionally, these corporations have been infested by the Robin Hoods and Illiterates of the 21th century.

Is Privatization of LEC and LWSC the answer for better Services?

In Africa, whenever the Africans cannot solve a problem, they go to others to find solutions for them, even though those they go to went to the same schools as their children.  Africans never asked themselves the hard questions such as, what they are doing wrong, or how they can find innovative solutions to the problems, or what tools/equipment do they need to solve these problems? Do they have the human capacity to man their institutions?  If the human capacity is lacking, how they can develop them, these are the questions that nationals of other countries, particularly Europeans, Americans and Asians, have asked themselves over the past 50 years. These were questions Kwame Nkrumah asked many years ago. This is the reason they are ahead of Africans and Africans are now thinking they have the answers to their problems. Singapore, for example, was as backward as many countries in Africa in 1960. Prime Minister Lee Kuan Yew asked similar questions in the late 1950s and developed innovative solutions. Today, a third world in 1958, Singapore became a first world country in the 1980s, just 22 years later.  Similarly, Liberia was richer than China in the 1960s. Today China is a First World Country. Liberians have never asked themselves this question, “What are we doing wrong that is keeping us stagnate?” This is the question we have never tried to answer with honesty. But let us come back to the question: should we privatize our public corporations (LEC and LWSC) so that they can become more productive, results-oriented and sustainable in their service delivery?

The question above is the million dollar question. This has become the debate around Monrovia.  Many people believe if these public corporations were privatized today, services will automatically improve.  Well, this might not be the case. For many of you who have been advocating for privatization, we ask you this question: How many countries do you know that have privatized their public corporations and services have improved and benefited the poor? We will make reference to a paper written by Kate Bayliss titled, “Water Utility Privatization”. According to him, he reviewed fourteen countries that had privatized their utility companies in Sub-Saharan Africa. He wrote that the evidence on the impact of privatization has been very little. He also reported that privatization has failed to address some of the fundamental constraints affecting public corporations around Africa, such as finance, political nature of service delivery and the lack of access by the poor. The Ghana Power Authority, for example, privatized their services and the private sector failed to improve services. In fact services got worse than when these services were provided by the public sector. Today, the Ghanaian Government owes the private company US$600 million.  Ghana also privatized its Ghana Water Company in urban cities in 2006. By 2011, it observed that the private company failed to meet its contractual agreement. The contract was cancelled. Sierra Leone also tried when she entered a contractual agreement with a Turkish Ship company (Karpowership) to supply 60 megawatts of energy. Currently the government owes Karpowership US$48 million. She recently pay only US$18 Million against the arrears. Karpowership has reduced energy supply from 60 Megawatts to 5 megawatts. The country currently has energy/power crisis. The Minister of Energy in neighboring Sierra Leone recently resigned because of the poor performance of the Energy Sector. This what we call taking responsibility. But in Liberia, the heads of the institutions take pride in poor performances. OH! WHAT A COUNTRY WE HAVE. And other leaders celebrate poor performances of head of institutions. While homes of the both low and high ranking officials are burning.

Both the LEC and LWSC have four levels of operations

1.  Generation/production
2. Transmission
3. Distribution
4. Commercial/sale).

The first two (generation/production and transmission) are much easier than the last two (distribution and commercial/sale). The private sectors in these sectors often take the easier components (generation/production and transmission). When the government is asked by the private sector, what is your country’s /city’s demand for energy or water? The government or city authorities give a figure in megawatts for energy or cubic meters for water. Based on these figures given, the private sector supply the demand as per the contract to the government/city authority at a given rate. If the government/city authorities fail to distribute and sell the demand supply as per the contract, government/city’s authorities pay the private sector 100%   for the quantity of energy or water supply.  A very good example is the CLSG arrangement. The government/ LEC requested for 50 megawatts of energy, but how much of this energy is distributed and sold monthly? At the end of the month, CLSG bills the LEC for the 50 megawatts supplied. Perhaps this is the reason LEC owes the CLSG over US$13.5 MILLION. Be careful with the private sector arrangement. Do not venture into it blindly.

Alternatives for sustainable supply of public services in Liberia

The government of Liberia can select one of two alternatives.

Alternative One: Political Commitment

Even if the public corporations are privatized and the government does not commit itself, no kind of privatization of any public corporation will yield the desired results (reliable service, financial viability, proper management, maintenance, meeting the demand of the population, etc.).  By political commitment we mean government’s willingness to be responsible by paying for services provided her agencies, Ministries and officials.  The government and her employees (High ranking officials) want to be Robin Hoods of the 21^st Century. They think that these services should be provided free to them. Despite, these government officials (Ministers, senators and representatives) are highest pay employees of government. Public corporations need to service their equipment, replace damaged parts, pay other institutions for services rendered, pay salary of employees, pay medical and insurance for their employees, buy operational vehicles, fuel and lubricants, and the list goes on. These corporations will not get these without paying for them. We have heard stories of government officials asking their securities to arrest employees of utility corporations who visited their homes requesting them to pay their bills. Currently, government officials (present and former) and government agencies owe these corporations millions of United States Dollars. If these officials and government agencies can just pay their bills and the legislature exercise it statutory responsibility of oversight), these corporations might perform far better than they are currently doing. Unfortunately, it is the common citizens who are often harassed and intimidated to pay their bills while government officials get the services free.

The Ivory Coast energy and water sectors are performing better than the sister corporations in Liberia because in 1970 the late Ivorian President, Felix Houphouet-Boigny had the political Commitment and courage when he said that all cabinets ministers that owed these corporations, if they  did not pay their arrears in 48 hours, they would be dismissed. In less than 24 hours, the corporations generated millions of United States Dollars. Does Boakai has the political will and courage to do similar thing?

The government can show its political commitment by appointing professional people as members of the Board of Directors and the management teams of these corporations, professionals who know the mandates of these corporations and who have innovative ideas to achieve the mandates, not politicians, friends, or the illiterates and Robin Hoods of the 21st century.

Our last feature which was published in late March was titled, “Liberia, the Robin Hoods of the 21st Century.” It is now online for ease of reference. For those who have not read it, we recommend that you read it and you will know who the Robin Hoods and the Illiterates of the 21^st Century are. Such people are gullible. They should never be considered to serve on the boards or management team of any corporation, and they are the ones who are destroying this beautiful and rich country called “Liberia”. These corporations can be viable and can achieve the mandates envisaged by our late President, William R. Tolbert, if we appoint people who are professionals and qualified not gullible people.

The political will can also been shown by following the ACTS creating these corporations. When the government amended chapter 88 Liberia Water and Sewer Corporation, Public Authorities Law, Title 30, Liberian Code of Laws Revised, created by an act to amend the Public Authorities Law 1973, to create the Liberia Water and Sewer Corporation Act of 2017, this amended act was intended to give the corporation some independence to perform as per mandates.

Does the president know his limitation as per this amended act? Below, we quote sections of the amended act. 

88.5 Board of Directors

Section 3 Tenure of office of Board Members. The private sector Members of the board shall hold office as follow:

1. All private sector members of the board shall be appointed on such terms and conditions as may be specified in the instrument of his/her appointment which shall, in the first instance, be for a period of four years.
2. He or she shall be eligible for re-appointment only for a subsequent period of four years.
3. In the event the tenure of service of a member expires, such member shall continue to serve until a replacement is appointed.
4. This term limit does not apply to members whose service on the board is consequence of being a statutory member.

Section 4. Resignation, Suspension, Removal or Death of Members

1. Resignation of member of the Board shall be in writing addressed to the Chairman, who will in turn forward same to the president.
2. The President may remove or suspend a member of the Board from continuing membership.
3. Upon the death of a member of the Board, the Chairman or member acting as Chair shall officially notify the president I writing

Section 5. Vacancies. The president shall within thirty (30) days after the creation of the vacancy on the Board appoint another person to fill the vacancy.

Now the question is does the president know that private sector Board Members have Tenure?

88.7 Managing Director.

1. Appointment. The Managing Director shall be appointed by the President, with the consent of the Liberian Senate, based on the recommendation from the Board of Directors. The Managing Director shall receive such salary as shall be established by the Board and approved by the President.

88.8. DEPUTY MANAGING DIRECTORS

1. The Corporation shall have four principal Deputy Managing Directors: The Deputy Managing Director for Administration, The Deputy Managing Director for Technical Services, the Deputy Managing Director for Sales and Marketing, and the Deputy Managing Director for Finance.

Appointment. All Deputy Managing Directors shall be appointed by the President with the consent of the Senate, upon recommendations of the Board of Directors. The Deputy Managing Directors shall receive such salaries as shall be established by the Board.

Another question is did the president know that the Board of Directors vets and recommend names to the president for the positions of Managing Director and Deputy Managing Directors for LWSC? Did the president violate 88.7 and 88.8 of the LWSC ACT? Should these appointment be none and void? Who should be blamed, the president or the senate that confirmed the appointees or the president’s men and women? We believe the Senate Subcommittee on Public Corporation should be blamed.

Unfortunately, we have made everything political in Liberia. Nobody follows the laws. Let us look at some other examples:

Liberia Electricity Corporation Act-1973

Certain provisions in the 1973 Act have not been amended and of such is 85.4 and 85.8.

85.4 Board of Directors: “The formation of policies and direction of management of the corporation shall be vested in a Board consisting of the Chairman of Public Utilities Authority (who shall serves as Chairman of the Board of Directors, Ministers of Finance, Planning and Economics Development, Justice and five persons from the private sector.

The Chairman of the Board shall be responsible for the overall diver of the corporation. The members of the Board except for the Chairman, who may receive a salary to be established by the Board, subject to the approval of the president, shall not receive salaries, but they may receive a stipend for each meeting attended and all expenses incurred in attending duties of the corporation.”

85.8 Executive Officer

The operational responsibilities for the implementing the programs and policies of the corporation shall be conducted by a Managing Director, who shall be appointed by the president with the advice and consent of the Senate. The Managing Director shall receive such salary as shall be established by the Board subject to the approval of President.

What stops the president from appointing a Managing Director of the LEC? The Managing Director of the LEC has NO TENURE. Some people at the LEC have Consultancy Contracts. They are consultants to the LEC and those contracts should be honored. Having one individual serving as Chairman, CEO and consultant in an entity implies that the country does not have the human capacity, which is far from the truth. There many experienced and qualified Liberians to be CEO of the LEC.

Alternative Two: Shares open to private sector

If we really want our public corporations to function as envisaged in 1973, we need to make some sweeping changes to the Act creating them. As per the Acts, these corporation have 1,000 shares each and government holds 100%, hence this gives the government/president the power to appoint the members of the Board of Directors and the Management Teams. We need to amend these Acts so that the Government can sell 75% of the shares to private individuals and other Private Corporations. When this is done, the shareholders will elect members of the Board and the Board of Directors will select and appoint members of the Management Teams based on merit. Upon the selection of the Management Teams, each member will sign a performance contract with the Board. We have to let these corporations function in a way to serve the people of Liberia. These corporations have a bright future and we as a people and government need to work with them to achieve their respective mandates. This will give them the latitude, independence and freedom to operate freely from political intimidation and harassment.

One good example of this is the Ivorian water and electricity companies. ERANOVE has 46.07% percent share in SODECI (the Ivorian water company). This has help SODECI to be one of the best service providers in the region. ERANOVE also operates in Senegal with the water company. The Ivorian and Senegalese’s water and electricity companies are doing far better than the Liberian counterparts. 

To show that these corporations have a bright future, in 2017 at 25% operating capacity of the LWSC, the Corporation’s monthly revenue was US$325,000.00.  An Engineering firm (NCL Engineering Services Ltd. Conducted a feasibility studies for Monrovia and three rural cities (Buchanan, Kakata and Zwedru). According to the firm projection, the Monrovia System should be generating net revenue of over US$2.5 Million annually at 100% operations and with a sound management and Board of Directors. For us, this should be the focus of the Board and the new management team. 

Operating at just 25% capacity, the management of the LWSC purchased the current headquarters of the LWSC on Sao Boso Street. They did this because the management team did not prioritize the purchase of luxury cars for the team. They purchased operational vehicles and fuel to operate the system. They were never on Facebook. And the welfare of the employees was number one.

We end this feature by making reference to the Holy Book-the Bible. Genesis Chapter one verse 26 says: Then God said, “Let Us make man in Our image, according to Our likeness.” Liberians, do you know what this means?  It means that Liberians are created in the image of God and they have His likeness, which implies they have talents to transform the country for the better, if they so wish. Liberians should take this responsibility seriously. It is not the responsibility of the Chinese or Ghanaians or Americans or Asians to build this country.  These people are only here for the money. This is the meaning of the quotation that started this feature. Liberians you have a job to do that no Ghanaian or American can do.  We want you to remember these words Liberians; you were created in the image of God and His likeness, but White Men have made us to think that we are CHICKENS.  We have been told over and over that nothing good comes from Liberia and we think we are CHICKENS. We do not believe we are good enough; when we get sick we go to foreign countries for treatment, we condemn our educational system and send our children to foreign countries for study, and we sideline Liberian professionals and hire foreigners.

We want to tell you today that Liberians are not CHIKENS as our foreign partners think.  In the late 1960s and 1970s Liberia was the pride of Africa because we had the best Hospital in West Africa, our educational system was excellent and we saw Ghanaians’, Nigerians, Sudanese, South Africans coming to Liberia to attend our High Schools, colleges and universities. Where did we go wrong? We were a founding member of Organization of African Unity, Mano River Union and ECOWAS.  One Liberian, who felt that he was not a CHICKEN but an EAGLE was Dr. Romeo A. Horton.  He showed to Africa and the world that Liberians were EAGLES by conceiving the establishment of the African Development Bank (AfDB). When he did, our foreign partners said such an idea sounded strange and elicited this question around the table: WHY DO YOU NEED AN AFRICAN DEVELOPMENT BANK?  Dr. Horton was able to convince President Tubman and the President sold the idea to the other African Heads of States. Today, Dr. Horton is dead but the African Development Bank is financing development projects in Africa. This is what an EAGLE does.

Liberians are EAGLES and we appeal to all Liberians today to stretch forth their wings and fly. Do not be content with the FOOD OF THE CHICKENS. After 178 years of independence, it is a SHAME that we cannot get things done properly. In the 1960s, Singapore, Korea, Japan, China and many other countries came to Liberia to learn because we had the best economic practices. We call on Liberians to strive to be the next Edward Wilmot Blyden or Romeo A. Horton or J. Rudolph Grimes or Louise Arthur Grimes, Dr. Mary Antoinette Brown Sherman. All the mentioned names refused to be contented with the FOOD OF THE CHICKEN because they knew that they were EAGLES. Let us reclaim our RIGHTFUL PLACE in Africa and the world.