From: Ambulah Abutumaga Mamey, International Development Practitioner

To: The Speaker and Members of the House of Representatives, Liberia

Subject: The New Port Regulatory Act Makes the ‘Referee a Player,” in Port Governance, Duplicates Maritime Functions, Will Demand Additional Fees from Port User, And Put Fiscal Pressure on the National Budget.

Date: February 16, 2025 

The Liberia Sea and Land Port Regulatory Act, passed on November 19, 2024, by the Honorable Liberia Senate and under review by the Honorable House of Representatives is a dangerous piece of legislation.

Section 48 of the Act grants the proposed regulatory agency the authority to acquire and operate ports. This provision empowers the agency to act as both regulator and operator—essentially playing the dual role of “referee and player” in the sea and land port sector and contradicts the established governance reform in Liberia, which has consistently ensured the separation of regulatory and commercial functions across State-Owned Enterprises (SOEs). Section 48 of the Act reads: “The Agency may—within the limits of available appropriations—acquire, establish, and improve port or harbor facilities and operate and maintain such port or harbor facilities.” 

Additionally, sections 4.4, 4.1 (4-f), 4.1(a), 4.1 (2-a), 4.1 (4-1), and 4.1 (b) of the Act significantly duplicate maritime- related functions of the Liberia Maritime Authority (LiMA) in ways that could undermine Liberia’s maritime program while section 306 of the Act authorizes funding mechanisms that puts fiscal pressure on the government’s budget, strangulate ports of revenue,  and levy additional fees on port users which will potentially raise the cost of imported goods and exacerbate economic hardship on Liberians.

Hon. Speaker and Hon Members of the House, a review of port governance in thirteen African countries reveals that countries avoid establishing separate port regulatory agencies. Instead, regulatory oversight is managed by the maritime authority or transport ministries, while the port authority manages the business and operations of all ports. The World Bank advises against excessive regulation in the port sector, recommending port regulators only in cases of severe market distortion which is currently not the situation in Liberia.

The importance of an efficient and modern port sector in Liberia cannot be overstated. Recent trade data underscores the urgency for port expansion and modernization. Liberia’s exports rose from $1.03 billion in 2021 to $1.27 billion in 2023, reflecting increased trade activity. However, a persistent trade deficit—peaking at 22% of GDP between 2022 and 2024—highlights the country’s heavy reliance on imports. Efficient ports are vital not only for maximizing the benefits of trade and creating jobs but also for securing the timely and affordable import of essential goods such as food, fuel, and machinery.

Instead of creating a new agency to cause regulatory confusion with the maritime authorities, potentially increasing the cost of doing business at the port, strain ports of the revenue they need and take money away from basic social services, the legislature should direct its energy to:

1. Modernize the National Port Authority Actto align with its current landlord model, improve governance, attract private partnerships, and empower the NPA to manage Liberia’s ports effectively.
2. Strengthen the Liberia Maritime Authority’s regulatory capacityto ensure robust oversight over seaports without redundancy or conflict.
3. Fast-track the implementation of the Single Window Initiative, which remains a critical tool to reduce transaction costs and improve efficiency at the ports.

Hon. Speaker and Members of the House, please see the next sections of the memo for the additional details on the four (4) key findings and recommendations that are summarized. above.

Key Findings and Analysis- 1

The New Port Regulatory Act:

Merges port regulatory and commercial management functions under a single entity while also allowing other ports to execute commercial functions. This is like making a referee a player in the same game.

• This action contradicts Liberia’s reform standards, which have focused on separating regulatory and commercial functions in in all sectors: See example below:

Key Findings and Analysis- 2

Overlap and Confusion with

Existing Regulatory Frameworks 

The new Act takes away the mandate to regulate seaport and seaport activities from the Liberia Maritime Authority and gave same to the Liberia Sea and Land Port Regulatory Agency: “Part VIll, of the Liberia Maritime Authority Act of 2010, amending section 37.3 of Title 12 of the Executive Law conferring on the Liberia Maritime Authority the powers to regulate the use of ports and harbors and other acts affecting shipping, the same is now and hereby amended conferring all such powers and authority to the Liberia Sea and Inland Ports Regulatory Agency. 

But in addition to transferring that broad mandate, the new Act usurps other functions of the Maritime Authority, setting the maritime regulatory regime for internal fight and confusion for international maritime bodies on who to go to or engage for the usurped functions. 

Key Findings and Analysis- 3

The funding structure proposed in Section 306 of the Act raises concerns about its financial sustainability and broader economic impact:

• The agency will be financed through a combination of national budget allocations, additional port user fees, and a mandatory 10% levy on revenue collected by private port operators.
• This imposes new costs on businesses and port users, potentially increasing the price of imported goods and making Liberia’s ports less competitive.
• The additional financial burden on the government could divert resources away from schools, hospitals, critical infrastructure, and efficiency improvements at the ports.

Key Findings and Analysis- 4

International Benchmarking: HOW is it done in Other countries?

Structures across Africa and other jurisdictions indicate that:

• Most countries do not establish separate port regulatory agencies. Instead, regulatory oversight remains with maritime authorities and transport ministries, while port authorities handle commercial activities.

• South Africa, one of the prominent exceptions, has a dedicated port regulator; however, the Transnet National Port Authority still manages all eight commercial seaports, ensuring operational efficiency.

• The World Bank and leading global trade organizations advise against excessive regulation in the port sector, as it can stifle innovation, increase costs, and create bureaucratic bottlenecks.

• The common practice for most African countries is not to have a dedicated port regulatory agency. Global best practices discourage over-regulation, as excessive oversight creates trade bottlenecks. See examples in the table below:

Recommendations:

1. Maintaining Regulatory and Commercial Separation Like it is With Airport, Telecom, Electricity, Oil Sector, etc.
   • Retain a distinct National Port Authority and Liberia Maritime Authority, ensuring regulatory clarity and operational efficiency.
   • If a separate Port Regulator must exist, thoroughly review the Liberia Sea and Land Port Regulatory Agency Act to delineate regulatory and commercial roles and allow the National Port Authority to manage Ports while the Port Regulator Regulates. The review should also ensure there is no overlap of functions with the Maritime Authority.
2. Mitigate Financial and Trade Disruptions
   • Policymakers should reassess the financial model proposed in the Act, advocating for a funding approach that does not impose excessive costs on port users and a blanket or uniformed mandatory revenue share with port operators, especially private port operators.
3. Strengthen Institutional Capacity within Existing Frameworks
   • Review the NPA Act to modernize its governance structure and align with the best global practices.
   • Focus on enhancing the efficiency of port operations and the Maritime Authority’s regulatory oversight without the need for an additional agency.