Liberia’s developing economy offers a wide variety of opportunities for investment, especially in natural resources such as mining, agriculture, and forestry (timber), but also in more specialized sectors such as infrastructure (including energy and telecommunications) and financial services. With its largely commodities-based economy, Liberia relies heavily on imports, including for more than half of its cereal needs like rice, Liberia’s most important staple food. The COVID-19 pandemic has negatively affected many sectors of the economy, which contracted in 2019 and 2020. However, the International Monetary Fund projects a return to positive growth in 2021.
Given its limited capacities, Liberia is also heavily dependent on foreign direct investment (FDI) to fulfill its development goals and growth potential, but foreign investors generally find the country a very difficult place to do business. Investors report negotiations with government are often lengthy, and long-established concession agreements can subsequently face calls from government officials and lawmakers for unilateral changes. They also report resistance from local communities, which claim the government has not consulted with them about land use. Communities and employees often expect concessionaires and other large investors to provide significant support including education, healthcare, and housing. Foreign investors report that the government sides with communities and employees when such issues arise, irrespective of concession or contractual agreements.
Low human development indicators, expensive and unreliable electricity, poor roads, a lack of reliable internet access (especially outside urban areas), and pervasive government corruption constrain investment and development. Most of Liberia lacks reliable power supply, though efforts to expand access to the electricity grid are ongoing through extension of a grid from the Mount Coffee Hydropower Plant, the West Africa Power Pool’s cross border electrification projects, and other internationally supported energy projects. The 2020 World Bank Doing Business Survey ranked Liberia 175th out of the 190 economies surveyed. Public perception of corruption in the public sector is high, as indicated by Liberia’s poor showing in Transparency International’s Corruption Perceptions Index. Low public trust in the banking sector has resulted in most cash being held outside the banks. This, combined with high banknote mutilation, inadequate currency replacement planning, and low use of mobile money platforms, means hard currency is regularly in short supply.
The government-backed Business Climate Working Group (BCWG) continues to work with both public and private sector stakeholders to explore opportunities for creating a business-friendly environment. Increased collaboration between business chambers, industry associations, and the Liberian government could improve the investment climate, and international donors continue to work on investment climate issues as well. Despite the abundance of challenges, Liberia remains a country rich in natural resources, agricultural land, and abundant rainfall. Agribusiness and extractive industries investors, in particular, can find that Liberia merits careful consideration. Several large international concessionaires have invested successfully in these sectors in Liberia.
|TI Corruption Perceptions Index||2020||137 of 180||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2020||175 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2020||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in Liberia ($M USD, historical stock positions)||2019||-$94 Million||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2019||$580||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|