By Sir. George Tengbeh
Introduction
The recent discourse surrounding Liberia’s dominance in Africa’s ship registry market raises critical questions about the fairness and long-term sustainability of the country’s economic model.
According to data from the United Nations Trade and Development, Liberia controls an astounding 97% of all vessels registered in West Africa, and 91% across the entire continent (Oracle News Daily, 2024). On the surface, this might seem like a monumental success.
Yet, beneath this towering statistic lies a stark contrast: Liberia receives only about $20 million annually from this massive industry, a figure that pales in comparison to the profits reaped by foreign shipowners who benefit from the country’s open registry system. This imbalance must be reexamined if Liberia is to truly benefit from its maritime assets.
𝐋𝐢𝐛𝐞𝐫𝐢𝐚’𝐬 𝐑𝐨𝐥𝐞 𝐚𝐬 𝐚 𝐅𝐥𝐚𝐠 𝐨𝐟 𝐂𝐨𝐧𝐯𝐞𝐧𝐢𝐞𝐧𝐜𝐞
Liberia’s shipping registry, much like Panama’s, is known as a “flag of convenience,” a system designed to offer foreign shipowners a cheap and easy way to register vessels under another nation’s flag.
This system was notably established after World War II, spearheaded by U.S. shipowners who sought to minimize operational costs, avoid taxes, and circumvent labor regulations that were more stringent in their home countries.
As a result, Liberia became one of the go-to nations for vessel registration, allowing companies to cut corners on labor laws and environmental standards (Oracle News Daily, 2024).
However, what was once a convenient arrangement for foreign entities has morphed into a system that leaves Liberia at a significant disadvantage. Despite the vast number of ships that carry the Liberian flag, the nation’s revenue from the registry remains a mere fraction of what these foreign corporations save in costs.
The annual $20 million Liberia receives from its shipping registry represents only a sliver of the profits generated by this industry.
As Sir-George S Tengbeh has highlighted in his discussions on Liberia’s economic trajectory, the country’s flagging system has been reduced to an enabler of foreign exploitation, where the rich natural and economic resources of Liberia are used to bolster foreign profits at the expense of the local population.
𝐓𝐡𝐞 𝐃𝐢𝐬𝐜𝐫𝐞𝐩𝐚𝐧𝐜𝐲, 𝟗𝟕% 𝐂𝐨𝐧𝐭𝐫𝐨𝐥, $𝟐𝟎𝐦𝐢𝐥𝐥𝐢𝐨𝐧 𝐌𝐢𝐧𝐢𝐦𝐚𝐥 𝐑𝐞𝐭𝐮𝐫𝐧𝐬
There is no doubt that Liberia’s open registry system has made the country a global leader in maritime registration, but the cost-benefit analysis is troubling. As one of the world’s most successful merchant fleets, Liberia’s control of 97% of vessels registered in Africa is impressive.
However, the $20 million annual income is paltry compared to what is possible for a nation with such control over a major global industry.
A more equitable arrangement would involve negotiating better terms with foreign shipping companies and introducing stricter regulations that would ensure a greater share of the wealth is reinvested into Liberia.
In the current arrangement, Liberia’s wealth is essentially siphoned off to foreign interests, leaving little for the country’s development. As Tengbeh pointed out in his analysis of US foreign policy toward Liberia, Liberia has long been treated as a “stepchild” by global powers like the U.S. (Oracle News Daily, 2024).
While Liberia offers its flag as a service, the profits return primarily to the ship owners and their host countries, reinforcing a pattern of dependency and underdevelopment.
𝐓𝐡𝐞 𝐆𝐥𝐨𝐛𝐚𝐥 𝐄𝐜𝐨𝐧𝐨𝐦𝐲 𝐚𝐧𝐝 𝐋𝐢𝐛𝐞𝐫𝐢𝐚’𝐬 𝐒𝐨𝐯𝐞𝐫𝐞𝐢𝐠𝐧𝐭𝐲
To understand why Liberia receives such a low annual return from its shipping registry, one must examine the dynamics of the global shipping economy.
The Liberian registry is attractive to ship owners because it allows them to avoid taxes and regulations in their home countries. Labor costs in Liberia are significantly lower than in most developed nations, making it more affordable to register a vessel under the Liberian flag.
Moreover, Liberia has fewer regulations related to environmental standards and worker protections, which allows ship owners to bypass the stricter regulations in their home countries.
While this system may be lucrative for foreign companies, it comes at a significant cost to Liberia. The money that could be used to improve infrastructure, education, and healthcare is instead pocketed by foreign corporations.
This situation mirrors the broader economic relationship between Liberia and the international community, where foreign powers, particularly the United States, have historically benefited more from their relationship with Liberia than vice versa.
As Tengbeh points out, U.S. foreign policy has often treated Liberia as a “stepchild” rather than a full partner, and this dynamic is reflected in the shipping registry system (Tengbeh, 2024).
𝐔.𝐒. 𝐅𝐨𝐫𝐞𝐢𝐠𝐧 𝐏𝐨𝐥𝐢𝐜𝐲 𝐚𝐧𝐝 𝐭𝐡𝐞 𝐄𝐱𝐩𝐥𝐨𝐢𝐭𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐋𝐢𝐛𝐞𝐫𝐢𝐚’𝐬 𝐒𝐡𝐢𝐩𝐩𝐢𝐧𝐠 𝐑𝐞𝐠𝐢𝐬𝐭𝐫𝐲 𝐩𝐫𝐨𝐠𝐫𝐚𝐦
In Sir-George S Tengbeh’s examination of U.S.-Liberia relations, he offers critical insights into how U.S. foreign policy has shaped Liberia’s economic realities. Historically, Liberia has been seen as a strategic ally of the U.S., with its open registry and welcoming approach to foreign businesses aligning well with U.S. corporate interests.
The shipping registry, in particular, can be traced back to post-World War II American interests. Yet, Liberia’s gains from this arrangement have been minimal, reflecting a broader pattern of U.S. involvement in Liberia’s affairs where benefits are asymmetrically distributed.
This dependency on foreign interests, particularly American ones, has resulted in Liberia becoming more of a facilitator of external profits rather than a nation maximizing its internal resources.
Tengbeh’s analysis of U.S. foreign policy on Liberia paints a picture of a country that has been economically and politically marginalized, despite its potential as a leader in African maritime affairs (Tengbeh, 2024).
The shipping registry is just one example of how Liberia has failed to capitalize on its natural and strategic assets, leaving it vulnerable to exploitation by foreign powers.
𝐓𝐡𝐞 𝐖𝐚𝐲 𝐅𝐨𝐫𝐰𝐚𝐫𝐝: 𝐑𝐞𝐜𝐥𝐚𝐢𝐦𝐢𝐧𝐠 𝐋𝐢𝐛𝐞𝐫𝐢𝐚’𝐬 𝐌𝐚𝐫𝐢𝐭𝐢𝐦𝐞 𝐖𝐞𝐚𝐥𝐭𝐡
Liberia must reconsider the terms of its shipping registry. While the system has brought some economic benefits, these are minuscule compared to what could be achieved through more assertive policies that prioritize national development.
Liberia should introduce higher fees for foreign companies that register their ships under the Liberian flag. This increase would not only boost government revenue but also reflect the true value of Liberia’s strategic position in the global shipping industry.
There is a need for Stricter Labor and Environmental Standards. One of the key reasons why foreign companies register their ships in Liberia is to avoid stringent labor and environmental regulations in their home countries.
By tightening these regulations, Liberia could ensure that shipowners contribute more to the welfare of its workers and the environment, without entirely losing its competitive edge.
Why are we not investing in the maritime sector? Liberia should invest more of the income generated from its shipping registry into its own maritime infrastructure. This would allow the country to develop its own shipping industry, reducing its reliance on foreign-owned vessels and increasing its control over its own maritime economy.
Can International support like (IMO) help to make our shipping registry better? Yes! Liberia should seek the support of international organizations, such as the International Maritime Organization (IMO), to ensure that it can negotiate fairer terms with foreign shipowners.
This would help Liberia to avoid being taken advantage of by more powerful nations and companies.
We have noticed over the past years the weakness of the governance of the sector. We have allowed one group of people to monopolize our shipping registry. Liberia must improve its governance and transparency in managing the shipping registry.
Corruption and mismanagement have long been issues in the country, and addressing these problems is key to ensuring that the benefits of the shipping registry are shared more equitably among the population.
Let me conclude by calling for a Maritime Sovereignty in the interest of Liberia. Liberia’s control of 97% of the vessels registered in Africa is undoubtedly impressive.
However, this achievement is diminished by the fact that the country receives only $20 million annually from its shipping registry.
As Sir-George S Tengbeh has highlighted, this situation is emblematic of Liberia’s broader relationship with foreign powers, particularly the United States, where the country’s resources are exploited for the benefit of others.
To truly benefit from its shipping registry, Liberia must renegotiate its terms with foreign ship owners, introduce stricter regulations, and invest more in its maritime infrastructure.
Only by doing so can Liberia ensure that its maritime wealth is used to benefit its own people, rather than enriching foreign corporations.
The time has come for Liberia to assert its maritime sovereignty and reclaim control over its own economic destiny.
-The Ghost Writer-
