Authors : Patrick Hettinger, Janice Olivia James
Liberia is facing headwinds to growth following two major shocks over the past year. The country is recovering from the effects of the Ebola Virus Disease (EVD) outbreak combined with the drop in international export prices for Liberia’s traditional engines of growth – iron ore and rubber – to slow economic growth in 2015 to 0.4%. Public infrastructure projects and the commencement of gold production will support estimated GDP growth of 2.8% in 2016, but the drawdown of the United Nations peacekeeping force will reduce demand for services while requiring the government to assume full responsibility for the security sector and its costs.
Liberia is facing lower revenue growth and tighter borrowing limits, calling for increased efforts to contain the wage bill and align expenditure and borrowing with development priorities in the lead up to the 2017 presidential elections. Energy production will gradually increase through 2018, but improved management of the sector will be necessary to maximise considerable investments and sustain service delivery. While gradually improving infrastructure will be a crucial support for economic growth, increased focus on improving the business environment will be necessary to diversify the economy and enable inclusive growth. Task forces on agriculture and manufacturing are prioritising interventions to improve the environment for business growth, to increase value-added and to attract investment in non-extractive sectors.
With urbanisation increasing rapidly in Monrovia, increased efforts on urban governance issues will be needed to sustain growth and improve the quality of life. Inadequate infrastructure and weak planning have led to a build-up of informal settlements, a lack of access to basic services, and traffic congestion. The urban road network and the water supply is expanding, but from a very low base. Increasing economic opportunities outside of Monrovia will help reduce urban migration. There is growing momentum to de-concentrate services and expand infrastructure in rural areas, but the process will take several years.
Africa: economic transformation hinges on unlocking potential of cities, says the African Economic Outlook 2016
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