In August, the National Oil Company of Liberia fired its entire staff of 200 people in a move aimed at reducing costs and saving the company from financial ruin due to declining oil prices. While it’s unusual to sack an entire staff, am I shocked? Perhaps, as it’s always shocking when a massive across-the-board firing takes place, but it’s long overdue.
Two years ago while visiting Liberia, a friend of mine invited me to the headquarters of NOCAL, located in the Episcopal Church Plaza at the corner of Ashmun and Randall streets in Monrovia.
At the time, working at NOCAL was the epitome of Liberian occupational prestige — and if there’s anything Liberia’s measly professionals seek the most, it is the delusion of grandeur, an elaborate job title that invokes public respect, and the perception of success among the impoverished majority.
As I entered the building, I was introduced to a fellow IBM employee who had taken time away from work in the United States to set up the information technology division of NOCAL. There was excitement in the air. Everyone at NOCAL had high hopes and dreams about Liberia’s oil industry.
To put the haves of NOCAL and the have-nots of Liberia-at-large into perspective, the average income in Liberia in 2013 was reportedly just US$436 per person. That’s for the entire year! According to figures reported by Voice of America, NOCAL’s current wage bill for the year was over US$7 million. Divided among the company’s 200 staff members, that’s an average salary of US$35,000 per year.
It’s hard to begrudge hopes, dreams, and good salaries in a struggling nation like Liberia. From its founding in the early 1800s as a colony of free blacks from the United States, Liberians have suffered more than their fair share of hardship including bloody wars and devastating diseases.
Prosperity ultimately arrived in Liberia after World War II, but it was short-lived. Much of Liberia’s most recent history is filled with political factionalism, regime change, civil war, and the worst Ebola crisis in history. Today, Liberia is the fourth poorest country in the world both in terms of annual income and in purchasing power.
While I advocate a better standard of living in Liberia and value those companies that pay their employees appropriately, NOCAL has two fundamental problems: There is no oil industry in Liberia — and shockingly, NOCAL does not understand the difference between burn rate and profit.
Let’s start with the so-called oil industry in Liberia. Yes, it’s true that oil prices have been falling around the world — and this decline is impacting oil-producing nations. However, Liberia isn’t producing commercial oil, much less selling it. Thus, falling prices for a product they are not selling are irrelevant.
Dubious oil contracts, allegations of mismanagement and corruption, and the Ebola crisis have all hindered oil exploration and the commercial development of an oil industry in Liberia.
The Voice of America article noted that NOCAL has a reputation “as a dumping ground for political appointees,” “bloated staff and mismanagement” and that there were signs at the company of extravagant travels and misspent money.
So, you have a national company established by the government designed to facilitate the development of the country’s oil and gas industry along with oil reserves off the coast that have potential. There’s a reason my friend and his colleagues were so hopeful two years ago.
But if Liberia is serious about developing its oil industry, it needs to get back to the basics with qualified, appropriately compensated staff and management. There’s no room for prestige, extravagance, lavish spending, political appointments, mismanagement or corruption.
President Ellen Johnson Sirleaf reportedly supports NOCAL’s decision to slash its bloated staff. According to a source in the Voice of America article, no more than 50 employees is a more realistic staffing level for NOCAL.
Developing an oil industry in Liberia could work, even with declining oil prices and in a post-Ebola environment, but you need to be smart about it. Starting over from scratch may be the smartest move NOCAL has made thus far.
