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Country Commercial Guides for FY 2000: Liberia Report prepared by U.S. Embassy Monrovia, released July 1999 Note*

CHAPTER II: ECONOMIC TRENDS AND OUTLOOK

A. MAJOR TRENDS AND OUTLOOK

LIBERIA'S NEED TO REBUILD FOLLOWING A SEVEN-YEAR CONFLICT COMBINED WITH ITS ABUNDANT NATURAL RESOURCES MAKE IT A COUNTRY WITH GREAT POTENTIAL FOR INVESTMENT. HOWEVER, AS LONG AS NOTHING IS DONE ABOUT THE CORRUPTION WHICH REACHES THE HIGHEST LEVEL OF GOVERNMENT, IT IS UNLIKELY THAT SERIOUS INVESTORS WILL BE INDUCED TO RISK CAPITAL IN LIBERIA. VERY LITTLE PROGRESS HAS BEEN MADE IN ADDRESSING THE CRITERIA LAID OUT BY THE INTERNATIONAL MONETARY FUND (IMF) FOR CREATING AN IMPROVED ECONOMIC ENVIRONMENT WHICH WOULD ATTRACT INTERNATIONAL INVESTMENT. THE ECONOMY REMAINS STAGNANT.

B. PRINCIPAL GROWTH SECTORS

THE MAJORITY OF FACILITIES IN LIBERIA WERE DEVASTATED DURING THE CIVIL CONFLICT, SO THERE IS POTENTIAL FOR GROWTH IN ALMOST EVERY SECTOR. FIGURES QUOTED ARE FROM GOVERNMENT SOURCES.

MINING: NATURAL RESOURCES ARE PRESENT IN GREAT ABUNDANCE. MINING OF GOLD, DIAMONDS, AND IRON ORE ACCOUNT FOR 22 PERCENT OF THE GROSS DOMESTIC PRODUCT (GDP).

MANUFACTURING: MANUFACTURING ACCOUNTS FOR ONLY 6 PERCENT OF THE GDP, BUT THE AVAILABILITY OF AGRICULTURAL CROPS, MINERAL RESOURCES, AND LOW-COST UNSKILLED LABOR PRESENTS OPPORTUNITIES FOR GROWTH IN THIS SECTOR.

AGRICULTURE: AGRICULTURE CONTRIBUTED ABOUT 20 PERCENT OF THE GDP BEFORE THE CIVIL CONFLICT. PRINCIPAL CROPS GROWN IN LIBERIA INCLUDE RICE, COCOA, COFFEE, OIL PALM, SUGAR CANE, AND CASSAVA. ALSO GROWN ARE PINEAPPLE, BANANA, PAPAYA, AND MANGO. RICE, THE STAPLE FOOD OF LIBERIA, COMES MOSTLY FROM IMPORTED SOURCES, BUT THE COUNTRY IS CAPABLE OF SELF-SUFFICIENCY IN RICE PRODUCTION. ATTAINMENT OF SELF-SUFFICIENCY WOULD REQUIRE CONSIDERABLE AGRICULTURAL DEVELOPMENT.

RUBBER: RUBBER IS CULTIVATED AND MINIMALLY PROCESSED FOR EXPORT. THERE IS POTENTIAL FOR GROWTH IN THE AREA OF SECONDARY PROCESSING.

FORESTRY: THE EASTERN PART OF THE COUNTRY CONTAINS THE MOST UNSPOILED REGION OF THE UPPER GUINEA FOREST, A HIGH PRIORITY CONSERVATION AREA DUE TO THE LARGE NUMBER OF ENDEMIC MAMMAL SPECIES. THIS AREA HAS POTENTIAL FOR GROWTH IN SUSTAINABLE LOGGING OF TROPICAL HARDWOODS, BUT IS CURRENTLY BEING DECIMATED BY ILLEGAL LOGGING AND FORESTRY MISMANAGEMENT.

TOURISM: THE POTENTIAL FOR GROWTH IN THIS SECTOR MAY BE MANY YEARS INTO THE FUTURE BECAUSE OF THE LACK OF AN ADEQUATE INFRASTRUCTURE AND PROBLEMS WITH REGIONAL AND INTERNAL STABILITY. HOWEVER, THE SEACOAST OF LIBERIA HAS MANY BEAUTIFUL TROPICAL BEACHES, A FAVORABLE CLIMATE IN THE DRY SEASON (SEPTEMBER-MAY), AND SPORT FISHING.

C. GOVERNMENT ROLE IN THE ECONOMY

POST-CONFLICT LIBERIA WITH LARGE FOREIGN DEBTS AND INADEQUATE GOVERNMENT REVENUES CANNOT RECOVER WITHOUT A PROGRAM OF ASSISTANCE FROM INTERNATIONAL FINANCIAL INSTITUTIONS (IFI)S AND DONORS. THE IMF HAS IDENTIFIED PROBLEMS WITH CONTINUED LAX EXPENDITURE CONTROLS AND EXTRABUDGETARY EXPENDITURES. LARGE RESOURCE ALLOCATIONS TO MILITARY EXPENDITURES AND FOREIGN TRAVEL AS OPPOSED TO MUCH NEEDED SOCIAL SERVICES REMAIN A PROBLEM. THE WILLINGNESS OF THE IFIS AND DONORS TO CONSTRUCT A PROGRAM TO BRING LIBERIA TO THE POINT WHERE IT WOULD BE ELIGIBLE FOR ASSISTANCE UNDER WORLD BANK RULES DEPENDS LARGELY ON THEIR BEING CONVINCED THAT THE GOVERNMENT OF LIBERIA IS COMMITTED TO SOUND ECONOMIC POLICIES. TO DATE, THAT HAS NOT HAPPENED.

D. INFRASTRUCTURE

THE INFRASTRUCTURE IN LIBERIA WAS TOTALLY DEVASTATED DURING THE CIVIL WAR YEARS FROM 1989-96. CURRENTLY, THERE ARE NO PUBLIC UTILITIES, SUCH AS ELECTRICAL POWER, SEWER, OR RUNNING WATER. ROADS IN AND AROUND MONROVIA GET MINIMAL MAINTENANCE, BUT ROADS TO THE HINTERLANDS ARE FREQUENTLY IMPASSABLE IN THE RAINY SEASON. THERE ARE BASIC TELECOMMUNICATIONS SERVICES, BUT NO DOMESTIC OR INTERNATIONAL POSTAL SERVICE.

THE NATIONAL TELECOMMUNICATIONS PROVIDER, LIBERIA TELECOMMUNICATIONS CORPORATION (LTC), IS NOT Y2K COMPLIANT AND MAY EXPERIENCE SWITCHING AND BILLING PROBLEMS. THE MAIN AIRPORT, ROBERTS INTERNATIONAL AIRPORT (RIA), IS IN THE PROCESS OF BEING RENOVATED. THE NEW EQUIPMENT BEING INSTALLED IS Y2K COMPLIANT. HOWEVER, TRAVEL TO AND FROM NEARBY WEST AFRICAN COUNTRIES THAT ARE NOT Y2K COMPLIANT MAY NOT BE POSSIBLE.