（作者：电子科技大学西非研究中心团队，执笔人：Bruce Emmanuel（西非研究中心助理）【西非漫谈】2022年第八期，总第五十七期。译者：赵韵涵（外国语学院）；整理：孟雅琪（公共管理学院）；供稿：电子科技大学西非研究中心团队)

--本文原刊载于环球网（Huanqiu.com）“西非漫谈”栏目

链接：https://opinion.huanqiu.com/article/47wGhVf8uyF

1.0. Introduction

Liberia is a country located in the Western part of Africa, with Côte d'Ivoire, Guinea and Sierra Leone as their borders. Monrovia is the capital city of Liberia with rich national history and culture dubbed “home to the Liberia National Museum”. In recent times, the people of Liberia of over 5million have been experiencing good governance. According to Mo Ibrahim Foundation, “good governance is the provision of political, social and economic public goods and services that every citizen has the right to expect from their government”. Good governance is crucial in making sure the people of Liberia are protected from all aspects. Moreover, a vibrant economy is vital to poverty reduction through job creation, foreign investments, developmental projects, etc. To achieve this, a good political stable environment is needed. Liberia is witnessing a peaceful democratic government after a very long political unrest (African Economic Outlook, 2018).

Consequently, the unrest devastated the economy the Liberian economy and affected the lives of the people of Liberia. Moreover, Liberia was considered among the world’s poorest countries due to the unrest. The country is recovering from this political instability through a development strategy to address development challenges and diversify the economy. Since the mid-2000s, the Liberian economy has seen improvement through infrastructure development. For instance, the Liberian Government unveiled a four-pillar development strategy to address the economic crisis (African Economic Outlook, 2018). The economy begins to revive though there were inflation pressures and persistent exchange rate and inflation pressures in the year 2017. In that year, the Liberian economy saw a growth in real gross domestic product (GDP) increasing to 2.3% in 2017. The Government also implemented fiscal policies to tackle the fiscal pressure in the economy. All these policies have triggered the recent economic improvement Liberian have seen today (World Bank Group, 2018).

Liberia has traditionally been regarded as one of the poorest in the African continent due to the unrest (Dukuly & Huang, 2020). Currently, the Liberian economy has seen a significant improvement due to intensive government economic policies to facilitate sustainable economic growth. Today’s newsletter looks at the overview of the Liberian economy and its transformational strategies.

2.0.  Overview of Liberia Economy

Liberia’s economy is growing and is one of the promising economies in Africa after certain factors devastated the economy. According to World Bank, (2021), the real GDP growth was projected to 3.6%, having a positive effect on the per capita GDP. Significantly, inflation became stable (moderated) at exactly 7.1% in the year (July 2021) due to the government monetary measure and policies (World Bank, 2021).

Source: https://www.usaid.gov/liberia/economic-growth

Moreover, these fiscal policies improved the economy for sometimes and perhaps increased revenues and reduction of government expenditures.

Additionally, it was reported that the total revenues and grants increased for the government was ($249.3 million), total expenditure ($286.4 million), having a fiscal deficit of $37.1 million (1.1% of GDP). Further, the Government of Liberia implemented a policy that devoted a special budget to fund fiscal operation. Through the established and approved policies by the legislature, the government was able to gain total revenues and grants of $429 million (12.7% of GDP) with five months (World Bank, 2021). Within the same duration, the expenditure was projected at $458.2 million (13.6%) including current expenditure. Moreover, the economy is estimated to expand in the year 2022-2023 by 4.9% though Covid -19 has affected the economy (World Bank, 2021).

Macroeconomic Indicators

Source. Data from domestic authorities; estimates (e) from the IMF and World Bank; predictions (p) are based on the authors’ calculations.

3.0 Recent Development and Prospects

The agriculture, forestry, fishing and hunting sector represents the mainstay of the Liberian economy. These three (3) sectors contribute 70.3% to the GDP in the year 2017. Moreover, the service sector contributes 22.8% to the economy whiles the manufacturing sector, mining and quarrying sector gives the economy 5.2% and 1.7% respectively.

Sector and real GDP growth (percentage)

Source. Data from domestic authorities; estimates (e) from the IMF and World Bank; predictions (p) are based on the authors’ calculations.

In addition, the Liberian Government adopted a medium-term expenditure framework (MTEF) in 2012/2013 to increase macroeconomic stability and public investment (African Economic Outlook, 2018). Government decides to reduce spending on goods and services whiles giving transfers, subsidies and financing domestic projects (investment). These measures enhance economic growth through support from development partners. Moreover, the public sector employees were projected to be 13.1% of GDP.

Source: https://www.usaid.gov/liberia/our-work

3.1. Monetary policy

The Central Bank of Liberia (CBL) aim is to achieve price stability through stabilizing broad exchange rate (African Economic Outlook, 2018). CBL introduced treasury bills and bonds to tackle domestic monetary issues in Liberia. Based on this, Central Bank of Liberia (CBL) auctioned foreign exchange, selling a total of USD 53.2 million in the year 2017 alone, thus depicting 117.1% compared to USD 24.5 million in 2016. The Central Bank of Liberia (CBL) introduction of these monetary policies was to stable the foreign exchange market and help to solve the depreciation of Liberian currency. On the other hand, a high dollar rate affects Central Bank of Liberia’s monetary policy. For instance, LRD got depreciated by 15.4% and 23.6% in 2016 and 2017 respectively. To solve this, Central Bank of Liberia (CBL) issued regulations for inbound money transfers (African Economic Outlook, 2018).

3.2. Debt policy

The expansive infrastructural projects of the Government of Liberia have contributed to the growth of the economy. Some of these projects include road construction, provision of electricity, energy, agriculture roads, construction of the airports and other infrastructural projects. Financing these projects was mainly through borrowing. Consequently, borrowing to finance these projects increased the nation’s total public debt stock from 31.9% to 36.7% from 2015 to 2016. Additionally, the total external debts of Liberia in the year 2017 alone was about 69.6% (African Economic Outlook, 2018).

4.0. Industrial Sectors in Liberia

4.1. Manufacturing Sector 

Industrialization is significant to every economy because its sustained the economy and provides employment opportunities for the citizens. This industrial policy helped in achieving the overall development objectives of a country. Moreover, industrialization helps in diversifying the economy and building a foundation for sustainable development (National Industrial Policy, Republic of Liberia, 2012). Liberia’s economy is growing and is currently made up of manufacturing firms that mainly produce for local or domestic consumption. Due to the industrialization capacity, most of the productions are for the domestic market. For instance, manufacturing firms in Liberia are mainly into the production of cement and beverages (goods) and others into the provision of services such as bakeries, household products, rubber products, and clothing, etc. Though this supports the domestic market expansion, it also employs a pool of talents and entrepreneurs who are ready for the market. Moreover, the manufacturing sector in Liberia was reported to have employed about 1.1 million representing (0.25%) of people in the country (National Industrial Policy, Republic of Liberia, 2012). According to report, in 2000 alone, Liberia’s manufacturing sector employed about 8% of the labor force rising to about 11.7% in 2017.

However, industrial sectors in Liberia have challenges that retard the progress of the economy. Poor Infrastructure has been identified as the main challenge for industrial development in Liberia. Due to the political unrest, Liberia’s infrastructure such as electricity, water, roads and other infrastructure projects was affected, hence affecting the cost of business production and distribution of goods and services to other regions in Liberia. Additionally, poor information flow and lack of transparency affect entrepreneurship and investment. This has a tremendous effect on entrepreneurial capabilities, coordination and planning. Moreover, human capital in Liberia is another challenge for industrial development. Most of the labor force is unskilled and has become a contributing factor to under-developed industries. To solve this, training needs to be given always to the unskilled labor force in Liberia (World Bank Group, 2021).

In overcoming these challenges, the Government of Liberia played a significant role in industrial development though it also came along with certain challenges namely: identification of barriers to growth, choosing or adopting strategies and tracking progress of strategies adopted. The Government of Liberia came out with an industrial policy to lower production costs and also to diversify the economy. Also, the agriculture sector which is the base of the economy has been supported by the Government through subsidies, and agricultural machines to the sector.

4.2. Agricultural Sector: 

Liberia’s agricultural contribution to the economy cannot be underestimated. Its contribution is a major source of employment and revenue to the economy. A small portion of arable land is for farming. Generally, farming in Liberia is low in productivity due to limited machinery, storage capacity, and infrastructure. Due to the limited farming engagement in Liberia, almost (80%) of staple foods are imported. However, strategies and policies have been implemented for the expansion of farming, especially in rice production and other crops. Moreover, investment in the technical ability of micro and small farmers have also improved productivity and attracted the youth in Liberia.

4.3. Service Sector

Liberia’s service sector comprises telecommunications, banking, professional services, transport, and logistics. The sector is considered underdeveloped in Liberia with low quality and high-cost services. Additionally, the service sector provides employment opportunities to the people as well as contributing to the Gross Domestic Product (GDP).

4.4. Tourism Sector 

Tourism is significant to the development of the economy and serves as an important poverty reduction tool. Tourism is seen as one of its fastest-growing economic sectors. Liberia is rich in culture in the area of coastal and marine tourism, wildlife, eco and adventure. In addition, tourism creates jobs opportunities, encourages investment, promotes rich culture and heritage and decentralizes development activities (International Trade Centre, 2020). According to Report, the Liberian tourism industry directly employed 195,000 people in the year 2010. To explain further, 74.7% of women benefited from the tourism sector employment indicating the sectoral growth and its positive effects on gender issues. In the year 2011, Liberia tourism sector generated about 15.01% (US$232 million) to the GDP (World Bank, 2020).

Table 2. Liberia’s tourism value indicators

Source: World Bank and NationMaster based on World Bank data

In order to achieve a sustainable tourist sector, the Liberian Government has implemented strategic future directions for the tourism sector. The directions include skills development, youth integration on tourism, local communities’ involvement in project design and implementation in addition to benefit-sharing, institutional development and coordination enhancement and finally market development and branding. Moreover, the Liberian Government is ensuring health and safety of potential visitors, effectively communicating to the visitors to restore confidence and improving national infrastructure and human capital.

4.5. Rebuilding Infrastructure and Providing Basic Services

Furthermore, infrastructural projects such as roads, ports and power supplies facilitate movement of goods and service to other regions in the country. Good roads are critical in transporting goods to rural consumers. Moreso, this provides new opportunities for new markets through which rural farmers/producers can sell their products to the cities as well. Additionally, the construction of Ports has connected Liberian markets to the rest of the world, providing a market expansion (World Bank Report, 2021).

Source: https://www.worldbank.org/en/news/

The construction of roads in the rural areas creates jobs directly for the citizens. People would be employed to help in the construction of roads and other infrastructures. Other sectors such as industries, agro-processing, rubber products, etc., can be expanded and networked through infrastructural development (Centre for Global Development, 2007). Also, regulation of business registration and documentation, the cost and duration have provided a suitable environment for entrepreneurs and other foreign investors.

Moreover, the educational system in Liberia is gradually building human capacity in order to fit into the job market, especially in both the public and private sectors. The education system in Liberia is rebuilding with training programs and skills to graduate to become productive (Radelet, 2007). Furthermore, the introduction of Technical and Vocational Skills Development by the Liberian Government to empower rural residents have been significant in reducing poverty. This strategy supports the Government’s national Poverty Reduction Strategy. The empowerment of youth to engage actively in activities that will provide them with a living. According to the Ministry of Labor, Liberia, about 5000 youths have been empowered through this Technical and Vocational Skills Development programme. Youth were taught agriculture, domestic skills, carpentry, computer software, computer repair, missionary work, and other related vocational educational activities.

4.6. Project Contracting in Liberia

Through China and African bilateral relations, the Chinese Government and Liberian Government partnered to support the industrial sector. China’s company Tidfore Investment Company and the Liberian government agreement provided a reasonable ground for Liberia to invest and boost the industrial sector (economy). During $200 million agreement signed between Tidfore Investment Company and the Liberian government, Zhang Yue, stated that “this investment should be kept as a young baby until it starts its full operation from the ground. "This investment will bring so much relief in the economy sector of Liberia". Moreover, the setting up of the steel company by the Chinese company would intend to provide jobs to about 1,000 people in Liberia.

Source: https://www./africa/liberia-china

Sino-Liberia cooperation has resulted in Chinese firms investing in the Liberian economy focusing on forestry, fishery and mining sector. Investing in these sectors has seen an immense contribution to the economy of Liberia through the provision of employment hence improving the livelihood of people and reduction of poverty. Some of the major infrastructure projects in Liberia by Chinese enterprises include APMT Monrovia Phase II Expansion Project, Oil Tank Removal and Reconstruction Project for LEC in Liberia, the Renovation and Upgrading of Roberts International Airport, 50 km Road from Karloken to Harper Redlight to Gbarnga 180km Road Project, the Design, Rehabilitation and Maintenance of 68.6km Road at Gbarnga-Ganta-Guinea Border, etc. Additionally, Chinese firms have continued to donate to most of the communities to support the locals (Ministry of Foreign Affairs, Liberia, 2019).

5.0. Reviving Economic Growth and Trade

In partnership with the Government of Liberia and USAID, various joint projects were undertaken to revive the economy of Liberia after the unrest. This is because infrastructure is seen as essential for growth. Moreover, these projects were identified as “cross-cutting initiatives”, mainly infrastructure, agriculture, forestry workforce development, energy and food security. Agriculture Sector and Food Security: Under this program, USAID and the Government of Liberia introduced “Feed the Future” mainly to enhance agricultural production through investing in rural farming, subsidizing private enterprise growth, and giving incentives to rural farmers or youth to empower them into farming (Ministry of Commerce and Industry, 2011). Moreover, infrastructure is ongoing to help transport farm products to the rural areas, thus the construction of feeder roads and linking the markets for farm products for consumption. For example, 500 km of roads have been constructed through such initiatives. Furthermore, improving and extending the electricity to the cities and other rural areas dubbed “Power Africa Initiative,” was introduced to partner private sectors to collaborate and invest in providing energy throughout the country of Liberia (World Bank Report, 2021).

In strengthening the human and institutional capacities in Liberia, the Government have put in place key policies and strategies in different sectors in order to revive the economy as depicted in the table below.

Table 1: Key Policies and Strategies

Source: Ministry of Agriculture, Republic of Liberia (2017).

In conclusion, rebuilding the Liberian economy through massive infrastructural development have been critical to the recovery after a long period of political unrest. Other key issues such as maintaining security, delivering basic health and educational facilities, providing jobs and implementing various monetary policies by the Central Bank of Liberia (CBL) have also contributed to Liberia’s economic recovery. Finally, the Government of Liberia partnering with other international bodies such UN, FAO and USAID have aided in reviving the Liberian economy (World Bank Group, 2018).

Reference

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