Liberia’s economy has stagnated over the past three years with negligible average annual growth rate over the period 2014–2016. The country is struggling to recover from the twin shocks of the Ebola Virus and the drop in international export prices for iron ore and rubber. This slowed economic growth in 2015 to only 0.4%. Prospects for growth are much better in 2017 as GDP is projected to grow by about 3%. Gold production and improvements in services are likely to account for the improvement in the country’s economic performance. The expansion in commercial gold production and continued growth in the agriculture sector are contributing to the economic growth in 2017. Over the medium term (2018-2021), economic growth is expected to stabilize at about 6.0 percent. Inflation is expected to average at around 8.0 percent over the next five years (2017-21). Liberia aspires to becoming a middle class economy by 2030 vision. The upcoming October presidential elections might affect the performance of the economy.
Why invest in Liberia?
- The country has a free-floating exchange rate regime;
- regime and guarantees that investors can transfer profits out of Liberia
- Ease of doing business, the world bank rated Liberia as 37th best in the world as a place to start a business;
- Recent reforms are expected to reduce the cost of doing business;
- Strategic positioning in sectors where other countries have reached supply saturation point;
- Access to ECOWAS, with market of 4.2 million people over/ over 300m ECOWAS, high demand for key goods like palm oil, fish and rubber products;
- Supportive tax regime, income tax rate is 25% on profits or 2% of turnover
- No capital controls, so any capital brought in Liberia can easily be expatriated
- Investment laws that protect investors against expropriation and nationalization
- The government has the willingness to fight corruption
From 1980 to 2006 racial tension and a mistrust in the political process led to a series of militarily backed dictatorships and the resulting civil war led by Charles Taylor. The civil war went until 2003 when the government to agreed to a special election which Taylor won primarily due to fear by electorate of further unrest. The rebellion led by groups opposed to Taylor’s government continued until Taylor stepped down and fled the country. The intervention of the international community led to the formation of an interim government that managed the country until the 2005 elections which were won by Ellen Johnson-Sirleaf, the current president. President Johnson-Sirleaf was re-elected in November 2011 in a poll marred by a low turn-out and a boycott by her main rival, Winston Tubman. She is due to step down following elections in October 2017. Liberia has commenced its voters’ registration exercise in preparation for the 2017 presidential and legislative elections. This exercise started on 1 February 2017 and is targeting over 2.5 million eligible voters. Liberia’s National Elections Commission (NEC) has validated 21 political parties to participate in the October 2017 elections: contestants will be vying to replace President Ellen Johnson Sirleaf, who will be completing her second and final term of office
Liberia’s population is estimated at 4.4 million with an estimated annual growth rate of 2.7% compared to the population of 3.47 million in 2008 population census. It projected that Liberia will have a population of 6.4 million by 2030
According to World Bank it was estimated that 49.7% of the total population lived in urban areas in 2015 with an estimated annual urban growth rate of 3.4% based on the period from 2010 to 2015
Doing business in Liberia
The highlights of World Bank score of doing business in Liberia are summarised as follows;
|Topics||World Bank 2017 Rank||World Bank 2016 Rank||Change in Rank|
|Starting a Business||37||33||
|Dealing with Construction Permits||175||172||
|Protecting Minority Investors||179||181||
|Trading across Borders||185||185||–|
There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment that include remittances of investment capital, earnings, loans, lease payment, or royalties. The Investment Act allows unrestricted transfer of capital, profits, and dividends to home countries.
Liberian legal system governs both domestic and international arbitrations taking place in Liberia but there is no specific law relating to arbitration. Liberia is a member of the International Center for Settlement of Investment Disputes (ICSID) and is a signatory to the MIGA Convention that guarantees the protection of foreign investments.
Key development challenges
- Lack of specific legal framework for protection of property and intellectual property rights;
- Creating a conducive investment climate as the country has a poor rank of number 174;
- Weak judicial institutions and
- Poor infrastructure to support economic development.
Liberia ranked number 90 out of the 176 countries that participated and scored 37 points out of 100 in the 2016 corruption perception index survey by Transparency International.
The security situation has remained relatively stable however the political opposition and civil society groups have continued to express concerns about the readiness of Liberian authorities for the transition, and especially for ensuring security during the presidential and legislative elections scheduled for October 2017.
Unemployment and skilled labour
Liberian labour force is predominantly illiterate and unskilled, and most Liberians, particularly those in the rural areas, lack basic vocational or computer skills. The Labour Force Survey (2010) indicated higher rates of vulnerable employment (86 percent) in the agriculture sector, which is highly informal. The Ministry of Labour (MOL) reports the overall unemployment rate in the formal sector is 25-30 percent, largely due to weak capacity of the private sector. According to the International Labour Organization (ILO), more than one-quarter (28 percent) of the youth population and one-third (35 percent) of the youth labour force is unemployed.
Attitude to Foreign Direct Investment
The Government of Liberia (GOL) continues to prioritize foreign direct investment (FDI) to realize its economic development goals. Liberia’s economy is based on a free enterprise system and government has adopted an open-door policy towards FDI. Overall, the government continues to make starting a business easier by eliminating business trade license fees. It has streamlined the steps and procedures involved in the business registration process to make it easier and faster. The transfer of property has also been made easier through a digitized records system at a land registry, known as the Center for National Documents and Records Agency (CNDRA). The National Investment Commission was created by an Act of the National Legislature on September 6, 1979 and amended on July 19, 2010 to promote and coordinate investment related activities in all sectors of the Liberian economy.
Restrictions on Foreign investment
Foreign private entities have the right to establish and own business enterprises, and engage in all forms of remunerative activities, except for businesses that are restricted exclusively for Liberians. According to the Investment Act and Revenue Code, which govern investments in Liberia, foreign investors have similar rights and are subject to similar duties and obligations as those that apply to domestic investors with some notable exceptions.
Intellectual Property (IP) Rights.
Intellectual property laws in Liberia cover such areas as domain names, traditional knowledge, transfer of technology, and patents/copyrights, etc. The Constitution of Liberia guarantees the protection of private property. The Liberia Intellectual Property (IP) Act of 2014, which the Senate passed into law in September 2015 and is pending passage by the lower house, provides the legal and administrative framework for the protection of intellectual and industrial property rights. The new IP Act merges the Liberia Copyright Office (LCO) and Liberia Industrial Property Office (LIPO) to create an autonomous National Intellectual Property Office (NIPO) independent of Ministry of Commerce and Industry (MOCI).
Liberia is a party to several international intellectual property agreements including the World Intellectual Property Organization (WIPO) and the African Regional Intellectual Property Organization (ARIPO). It is also a contracting party to international conventions and treaties on the protection of intellectual and industrial property rights.
Liberia is rich in natural resources, including rubber, diamonds, gold, mineral resources, and iron ore.
Investment climate has been summarized to include the following
- Development partners of Liberia
- Double Tax Treaties in Liberia
- Exports of Liberia
- International Trade Agreements with Liberia
- Investment Authority of Liberia
- Investment incentives in Liberia
- Investment Guarantees in Liberia
- Investment opportunities in Liberia
- Natural Resources of Liberia
- Trading partners of Liberia
- Shipping News
Sources of information