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Economy of Liberia

Liberia was traditionally noted for its academic institutions, iron-mining, and rubber. Political upheavals beginning in the 1980s and a 14-year civil war (1989-2003) largely destroyed Liberia's economy and brought a steep decline in living standards. The Liberian economy relied heavily on the mining of iron ore and on the export of natural rubber prior to the civil war. Liberia was a major exporter of iron ore on the world market. In the 1970s and 1980s, iron mining accounted for more than half of Liberia's export earnings. Following the coup d'etat of 1980, the country's economic growth rate slowed down because of a decline in the demand for iron ore on the world market and political upheavals in Liberia. The 1989-2003 civil war had a devastating effect on the country's economy. Most major businesses were destroyed or heavily damaged, and most foreign investors and businesses left the country. Iron ore production stopped completely, and the United Nations banned timber and diamond exports from Liberia. UN sanctions on Liberian timber were removed in 2006; activity in the timber sector was expected to resume on a large scale during the October 2008-May 2009 dry season. Diamond sanctions were terminated by the UN Security Council in April 2007, and Liberian diamond exports have resumed through the Kimberley Process Certification Scheme . Gold deposits, some of which are nearing production, should contribute to government revenues and provide employment. Liberia's revenues come primarily from rubber exports and revenues from its maritime registry program. Liberia has the second-largest maritime registry in the world; there were over 3,000 vessels totaling nearly 100 million gross tons registered under its flag, earning some $20 million in maritime revenue. There is increasing interest in the possibility of commercially exploitable offshore crude oil deposits along Liberia's Atlantic Coast. Liberia’s economy has continued to grow modestly, despite the global economic downturn, and the International Monetary Fund (IMF) projects strong GDP growth through 2012. The inflation rate in 2009 averaged 7.4%. The Liberian Government’s budget for the 2010-2011 fiscal year (ending June 30, 2011) reached $369 million, 0.5% lower than the final budget the previous year. Despite rich natural resources and potential for self-sufficiency in food production, Liberia’s productive capacity remains depressed by high unemployment, low literacy, poor health, corruption, and the absence of basic infrastructure. Only about 15% of the workforce is employed in the formal sector. The adult literacy rate is estimated at 55.5%, and 68% of Liberians live below the poverty line. An estimated 35% of Liberians are malnourished, only 28% are fully immunized, just 25% have access to safe drinking water, and only 36% have access to proper sanitation. Sustained economic growth is also hindered by inadequate roads, water, sewage, and electrical services. Nevertheless, Liberia’s HIV/AIDS rate is under 2%, and the government is conducting prevention campaigns. The government is in the third year of a 3-year Poverty Reduction Strategy (PRS), which ends in June 2011. In September 2009, Liberia concluded the Governance and Economic Management Assistance Program (GEMAP) and reached Heavily Indebted Poor Countries (HIPC) completion point in June 2010. Liberia remains open to foreign investment, having attracted over $100 million in new investment in the first half of 2009 and announcing 39 reforms to the business climate in 2008 and 2009. Liberia cleared its arrears to the World Bank, International Monetary Fund, and African Development Bank (approximately $1.6 billion). It cleared nearly $1.4 billion in arrears to Paris Club creditors in September 2010. Reform of the budget process continues. The government publishes detailed copies of the final budget and quarterly fiscal outturns. The final 2010-2011 budget of $369 million is 6.3% higher than the initial budget submitted to the legislature. In FY 2010-2011, the Liberian Government committed to allocating 60% of its budget to Poverty Reduction Strategy goals, and its expenditures for health and education increased by 10%. Low-income tax payers received a tax break in 2010, with their effective tax rate dropping from 25% to 20%. U.S. Treasury advisors are working with the Ministry of Finance to improve tax administration, strengthen internal controls, and increase revenue collection. The Liberia Extractive Industries Transparency Initiative (LEITI) continues to operate successfully in its third year, and Liberia was only the second country to obtain EITI compliance. In 2010, the government enacted several pieces of legislation to modernize commercial transactions and expand commercial activities. In fall 2010, Liberia became the first West African country to enact a Freedom of Information Act. The Central Bank of Liberia has maintained low single-digit inflation since 2009, thanks in part to stable commodity prices. The government is trying to privatize the Freeport of Monrovia, which will lower import costs for consumables and capital equipment. In early September 2010, Delta Airlines inaugurated direct flights between Atlanta and Monrovia, and President Johnson Sirleaf signed a 3-year deal with Chevron to explore for oil offshore. However, Liberia’s economy remains less competitive because of the high cost of operating in country. The need for private security services, the lack of basic infrastructure such as road networks, electricity, and water/sewage systems and limitations on local human resources all drive up the costs of doing business. The costs of rebuilding damaged infrastructure are enormous. The economy is heavily dependent on the infusion of funds made available by international donors, the presence of the UNMIL peacekeeping force, and international non-governmental organizations (NGOs). Foreign assistance ($425 million) still exceeds the national budget. Ongoing economic reforms are squeezing entrenched interests, possibly leading to stronger resistance to further reform. Delays in initiating transparent, commercially sustainable export of timber continue to have a negative impact on the budget. Concerns about possible corruption and lack of transparency in timber, iron ore, and agricultural contracts increase the uncertainty of the investment climate and threaten the resumption of these once-vibrant industries. The ongoing dominance of the import and wholesale/retail economy by Lebanese and Asian businesspeople continues to breed resentment. The government still favors policies protecting Liberian ownership of some sectors of the economy. Laws limit foreign employment in particular sectors, even, in practice, when a qualified Liberian may not be available. These laws have discouraged long-term investment by foreign-owned/operated businesses. Modernization in the sectors reserved for Liberians has been hampered by lack of capital and technical expertise. Liberian nationality laws restrict citizenship (and thus land ownership) to those of “Negro descent.” Despite having enacted laws on intellectual and industrial property and copyright, the government has failed to enforce these laws. There is widespread sale of pirated CDs, counterfeit drugs, and knock-off electronic products. Persistent corruption and a culture of patronage inhibit open and transparent concession and procurement processes. The Public Procurement and Concessions Commission and the Liberia Anti-Corruption Commission (LACC) have yet to develop the capacity and political will to offset fully these influences. Efforts to reform the procurement process at government ministries and agencies have slowed government expenditure and continue to falter due to lack of institutional capacity. Economy GDP (2009): $876 million. Real GDP growth rate (2009): 4.9%. Real per capita GDP (2009): $128. Average annual inflation (2009): 7.4%. Natural resources: Iron ore; rubber; timber; diamonds; gold; tin; possible offshore deposits of crude oil. Agriculture: Products --coffee, cocoa, sugarcane, rice, cassava, palm oil, bananas, plantains, citrus, pineapple, sweet potatoes, corn, and vegetables. Industry: Agriculture (61% of 2009 GDP); rubber; diamonds; gold; iron ore; forestry; beverages; construction. Trade (2009): Exports --$148 million (rubber 61%). Major markets --India (26.5%); United States (17.9%); Poland (13.9%). Imports --$551 million (rice 29%; machinery/transport equipment 23%). Major markets --South Korea (27.2%); Singapore (25.5%); Japan (11.8%).

Geography of Liberia

Location: Western Africa, bordering the North Atlantic Ocean, between Cote d'Ivoire and Sierra Leone Map references: Africa Area: total area: 111,370 sq km land area: 96,320 sq km comparative area: slightly larger than Tennessee Land boundaries: total 1,585 km, Guinea 563 km, Cote d'Ivoire 716 km, Sierra Leone 306 km Coastline: 579 km Maritime claims: territorial sea: 200 nm International disputes: none Climate: tropical; hot, humid; dry winters with hot days and cool to cold nights; wet, cloudy summers with frequent heavy showers Terrain: mostly flat to rolling coastal plains rising to rolling plateau and low mountains in northeast Natural resources: iron ore, timber, diamonds, gold
Land use: arable land: 1% permanent crops: 3% meadows and pastures: 2% forest and woodland: 39% other: 55% Irrigated land: 20 sq km (1989 est.) Environment: current issues: tropical rain forest subject to deforestation; soil erosion; loss of biodiversity; pollution of rivers from the dumping of iron ore tailings and of coastal waters from oil residue and raw sewage natural hazards: dust-laden harmattan winds blow from the Sahara (December to March) international agreements: party to - Endangered Species, Nuclear Test Ban, Ship Pollution, Tropical Timber 83, Tropical Timber 94; signed, but not ratified - Biodiversity, Climate Change, Environmental Modification, Law of the Sea, Marine Dumping, Marine Life Conservation

Government of Liberia

Liberia has a bicameral legislature consisting of 64 representatives and 30 senators. The 2005 election placed a spectrum of political personalities in the legislature, most for 6-year terms. Senior senators were elected for 9-year terms. Party structures remain weak, and politics continues to be personality-driven. Historically, the executive branch heavily influenced the legislature and judicial system. International efforts are aimed at shoring up the capacity of the judiciary. Liberia's court system is divided into four levels, including justices of the peace, courts of record (magistrate courts), courts of first instance (circuit and specialty courts), and the Supreme Court. Traditional courts and lay courts exist in rural areas of the country. Trial by ordeal, though officially outlawed, is practiced in various parts of Liberia. The formal judicial system remains hampered by severe shortages of qualified judges and other judicial officials. Locally, political power emanates from traditional chiefs (town, clan, or paramount chiefs), mayors, and district commissioners. There are 15 counties in Liberia. The Supreme Court confirmed the president's power to appoint city mayors and county superintendents in a February 2009 ruling. Principal Government Officials President--Ellen Johnson Sirleaf Vice President--Joseph Nyumah Boakai Speaker of the House of Representatives--J. Alex Tyler Chief Justice of the Supreme Court--Johnnie N. Lewis Minister of Foreign Affairs--Olubanke King-Akerele Liberia maintains an embassy in the United States at 5201 16th Street, NW, Washington DC, 202-723-0437. Type: Republic. Independence: From American Colonization Society July 26, 1847. Constitution: January 6, 1986. Political parties: 30 registered political parties.

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History of Liberia

Portuguese explorers established contacts with Liberia as early as 1461 and named the area Grain Coast because of the abundance of grains of Malegueta Pepper. In 1663 the British installed trading posts on the Grain Coast, but the Dutch destroyed these posts a year later. There were no further reports of European settlements along the Grain Coast until the arrival of freed slaves in the early 1800s. Liberia, which means "land of the free," was founded by freed slaves from the United States in 1820. These freed slaves, called Americo-Liberians, first arrived in Liberia and established a settlement in Christopolis now Monrovia (named after U.S. President James Monroe) on February 6, 1820. This group of 86 immigrants formed the nucleus of the settler population of what became known as the Republic of Liberia. Thousands of freed slaves from America soon arrived during the following years, leading to the formation of more settlements and culminating in a declaration of independence on July 26, 1847 of the Republic of Liberia. The idea of resettling free slaves in Africa was nurtured by the American Colonization Society (ACS), an organization that governed the Commonwealth of Liberia until independence in 1847. The new Republic of Liberia adopted American styles of life and established thriving trade links with other West Africans. The formation of the Republic of Liberia was not an altogether easy task. The settlers periodically encountered stiff opposition from African tribes whom they met upon arrival, usually resulting in bloody battles. On the other hand, the newly independent Liberia was encroached upon by colonial expansionists who forcibly took over much of the original territory of independent Liberia. Liberia's history until 1980 was largely peaceful. For 133 years after independence, the Republic of Liberia was a one-party state ruled by the Americo-Liberian-dominated True Whig Party (TWP). Joseph Jenkins Roberts, who was born and raised in America, became Liberia's first President. The style of government and constitution was fashioned on that of the United States. The True Whig Party dominated all sectors of Liberia from independence until April 12, 1980, when indigenous Liberian Master Sergeant Samuel K. Doe--from the Krahn ethnic group--seized power in a coup d'etat. Doe's forces executed President William R. Tolbert and several officials of his government, mostly of Americo-Liberian descent. As a result, 133 years of Americo-Liberian political domination ended with the formation of the People's Redemption Council (PRC). Doe's government increasingly adopted an ethnic outlook as members of his Krahn ethnic group soon dominated political and military life in Liberia. This caused a heightened level of ethnic tension, leading to frequent hostilities between the politically and militarily dominant Krahns and other ethnic groups in the country. Political parties remained banned until 1984. Elections were held on October 15, 1985, in which Doe's National Democratic Party of Liberia (NDPL) was declared winner. The elections were characterized by widespread fraud and rigging. The period after the elections saw increased human rights abuses, corruption, and ethnic tensions. The standard of living, which had been rising in the 1970s, declined drastically. On November 12, 1985, former Army Commanding Gen. Thomas Quiwonkpa invaded Liberia by way of neighboring Sierra Leone and almost succeeded in toppling the government of Samuel Doe. Members of the Krahn-dominated Armed Forces of Liberia repelled Quiwonkpa's attack and executed him in Monrovia. On December 24, 1989, a small band of rebels led by Doe's former procurement chief, Charles Taylor, invaded Liberia from the Ivory Coast. Taylor and his National Patriotic Front rebels rapidly gained the support of Liberians because of the repressive nature of Samuel Doe and his government. Barely 6 months after the rebels first attacked, they had reached the outskirts of Monrovia. The 1989-1996 Liberian civil war, which was one of Africa's bloodiest, claimed the lives of more than 200,000 Liberians and further displaced a million others into refugee camps in neighboring countries. The Economic Community of West African States (ECOWAS) intervened and succeeded in preventing Charles Taylor from capturing Monrovia. Prince Johnson--who had been a member of Taylor's National Patriotic Front of Liberia (NPFL) but broke away because of policy differences--formed the Independent National Patriotic Front of Liberia (INPFL). Johnson's forces captured and killed Doe on September 9, 1990. An Interim Government of National Unity (IGNU) was formed in Gambia under the auspices of ECOWAS in October 1990, and Dr. Amos C. Sawyer became President. Taylor refused to work with the interim government and continued fighting. By 1992, several warring factions had emerged in the Liberian civil war, all of which were absorbed in the new transitional government. After several peace accords and declining military power, Taylor finally agreed to the formation of a five-man transitional government. After considerable progress in negotiations conducted by the United States, United Nations, Organization of African Unity (now the African Union), and ECOWAS, disarmament and demobilization of warring factions were hastily carried out. Special elections were held on July 19, 1997, with Charles Taylor and his National Patriotic Party emerging victorious. Taylor won the election by a large majority, primarily because Liberians feared a return to war had Taylor lost. For the next 6 years, the Taylor government did not improve the lives of Liberians. Unemployment and illiteracy stood above 75%, and little investment was made in the country's infrastructure. Liberia is still trying to recover from the ravages of war; six years after the war, pipe-borne water and electricity were still unavailable, and schools, hospitals, roads, and infrastructure remained derelict. Rather than work to improve the lives of Liberians, Taylor supported the bloody Revolutionary United Front in Sierra Leone, fomenting unrest and brutal excesses in the region, and leading to the resumption of armed rebellion from among Taylor's former adversaries. On June 4, 2003 in Accra, Ghana, ECOWAS facilitated the inauguration of peace talks among the Government of Liberia, civil society, and the rebel groups called “Liberians United for Reconciliation and Democracy” (LURD) and “Movement for Democracy in Liberia” (MODEL). LURD and MODEL largely represent elements of the former ULIMO-K and ULIMO-J factions that fought Taylor during Liberia’s previous civil war (1989-1996). Also on June 4, 2003, the Chief Prosecutor of the Special Court for Sierra Leone issued a press statement announcing the opening of a sealed March 7 indictment of Liberian President Charles Taylor for “bearing the greatest responsibility” for atrocities in Sierra Leone since November 1996. By July 17, 2003 the Government of Liberia, LURD, and MODEL signed a cease-fire that envisioned a comprehensive peace agreement within 30 days. The three combatants subsequently broke that cease-fire repeatedly, which resulted in bitter fighting that eventually reached downtown Monrovia. On August 11, 2003, under intense U.S. and international pressure, President Taylor resigned office and departed into exile in Nigeria. This move paved the way for the deployment by ECOWAS of what became a 3,600-strong peacekeeping mission in Liberia (ECOMIL). On August 18, leaders from the Liberian Government, the rebels, political parties, and civil society signed a comprehensive peace agreement that laid the framework for constructing a 2-year National Transitional Government of Liberia (NTGL), headed by businessman Gyude Bryant. The UN took over security in Liberia in October 2003, subsuming ECOMIL into the United Nations Mission in Liberia (UNMIL), a force that grew to its present size of nearly 13,000 troops and 1,194 police officers. The October 11, 2005 presidential and legislative elections and the subsequent November 8, 2005 presidential run-off were the most free, fair, and peaceful elections in Liberia's history. Ellen Johnson Sirleaf defeated international soccer star George Weah 59.4% to 40.6% to become Africa's first democratically elected female president. She was inaugurated in January 2006 and formed a government of technocrats drawn from among Liberia's ethnic groups and including members of the Liberian diaspora who had returned to the country to rebuild government institutions. The president's party, the Unity Party, does not control the legislature, in which 12 of the 30 registered political parties are represented. The political situation has remained stable since the 2005 elections. The Government of Liberia has made positive strides aimed at political stability and economic recovery. President Sirleaf has taken a public stance against corruption and has dismissed several government officials. The President is supported by highly experienced and technically competent senior officials, and the public has more confidence in her administration than in any of its recent predecessors. President Sirleaf enjoys good relations with international organizations and donor governments, with whom she is working closely on Liberia's development. The national legislature has enacted several key reforms despite some delays caused by the need to gain consensus among the numerous parties represented. In order to maintain stability through the post-conflict period, Liberia's security sector reform efforts have led to the disarmament of more than 100,000 ex-combatants, the wholesale U.S.-led reconstruction of the Armed Forces of Liberia, and a UN-led effort to overhaul the Liberian National Police. The mandate of UNMIL has been extended to September 2008 and a gradual drawdown will commence in 2008, to last several years. During this period the Government of Liberia and its development partners will focus on creating jobs, attracting investment, and providing education and other essential services to Liberia's communities.

People of Liberia

There are 16 ethnic groups that make up Liberia's indigenous population. The Kpelle in central and western Liberia is the largest ethnic group. Americo-Liberians who are descendants of freed slaves that arrived in Liberia after 1820 make up less than 5% of the population. There also are sizable numbers of Lebanese, Indians, and other West African nationals who comprise part of Liberia's business community. The Liberian constitution restricts citizenship to only people of Negro descent, and land ownership is restricted to citizens. Nationality: Noun and adjective --Liberian(s). Population (2009): 3.955 million. Annual population growth rate (2008): 2.1%. Ethnic groups: Kpelle 20%, Bassa 14%, Gio 8%, Kru 6%, 52% spread over 12 other ethnic groups. Religions: Christian 85%, Muslim 12%, other 1.5%, no religion 1.5%. Languages: English is the official language. There are 16 indigenous languages. Education: Literacy (2008)--58%. Health: Life expectancy (2008)--58 years. Work force: Agriculture --70%; industry --15%; services --2%. Employment in the formal sector is estimated at 15%.