The African Development Bank (AfDB) latest report on Liberia reveals that despite the country’s abundant natural resources and youthful population, access to capital for inclusive and sustainable development remains critically insufficient.
From rich biodiversity and vast mineral reserves to fertile agricultural land, Liberia holds the building blocks for economic transformation.
Yet, the country continues to grapple with entrenched structural barriers, institutional weaknesses, and governance shortfalls that obstruct the path to long-term growth.
According to the report, in 2021, Liberia made a major leap by revising its System of National Accounts to incorporate environmental considerations. This revision, through the adoption of the System of Environmental-Economic Accounting (SEEA), allows for a more accurate valuation of the nation’s natural assets-forests, water bodies, and mineral deposits.
However, these gains are being undermined by widespread revenue leakages and persistent illicit financial flows (IFFs).
“Illicit financial flows remain a major drain on public revenue,” said a senior official at the Ministry of Finance and Development Planning (MFDP). “They erode our capacity to invest in health, education, and infrastructure.”
A 2014 Global Financial Integrity (GFI) report estimated Liberia loses approximately US$157 million annually to illicit activities-mostly through illegal logging and mining. This staggering figure equates to nearly 8% of the country’s GDP.
While transparency initiatives such as the Liberia Extractive Industries Transparency Initiative (LEITI) exist, enforcement remains insufficient.
Underutilized Natural Wealth
Liberia’s forests act as significant carbon sinks, positioning the country for potential gains in the global carbon market. Yet, mismanagement, unregulated exploitation, and weak concession oversight continue to hamper progress in forestry and mining.
The Forestry Development Authority (FDA) reported in 2011 that up to 70% of timber exports were unaccounted for, signaling massive losses in public revenue. Similar inefficiencies plague the mining sector, where underreporting and weak royalty payments are common.
Private Sector Stagnation and Low Firm Density
Liberia’s economy remains largely informal, with only 0.5 registered firms per 1,000 inhabitants, compared to Ghana’s 35,000 registered firms. This lack of formal business activity limits job creation, investment, and innovation.
“There’s enormous potential in small businesses,” said a Ganta-based entrepreneur. “But we need access to credit, infrastructure, and real government support to grow.”
A weak financial sector and poor infrastructure further restrict access to capital, especially for small and medium-sized enterprises (SMEs), key drivers of employment and economic diversification.
Human Capital in Crisis
Liberia also faces significant challenges in developing its human capital. On average, Liberians complete only six years of schooling, compared to nine in Ghana. Dropout rates remain high, particularly in rural areas.
In health, the maternal mortality rate stands at a worrying 725 deaths per 100,000 live births, reflecting gaps in access to quality care.
Meanwhile, youth unemployment continues to rise, with many between ages 15 and 35 not engaged in formal education, training, or employment.
The AfDB report, among other things stated that much of Liberia’s development bottleneck stems from weak governance structures. Institutions responsible for resource management, like the MFDP, Liberia Revenue Authority (LRA), and sectoral ministries, face limited coordination, outdated systems, and critical capacity gaps.
Tax policies, especially in extractive industries, are often inconsistent and poorly enforced. In 2023 alone, tax waivers cost the government an estimated US$175 million, a significant blow to public finances.
“We need to digitalize service delivery, invest in civil service reform, and restore public trust,” noted a governance expert at the AfDB. “Without systemic reform, Liberia will continue to struggle with mobilizing domestic resources effectively.”
Despite the grim outlook, the AfDB report emphasizes that Liberia still holds enormous untapped potential. With targeted reforms, the country can build a more inclusive, diversified, and resilient economy.
Key recommendations include:
Strengthening tax administration and enforcement
Improving access to finance for SMEs
Investing in education, healthcare, and vocational training
Ensuring transparency and accountability in natural resource contracts
According to the United Nations Conference on Trade and Development (UNCTAD), Africa could recover up to US$89 billion annually by curbing illicit financial flows. Even a fraction of this amount, if recovered in Liberia, could significantly boost development efforts.
“Good governance is not just about stopping corruption,” said a policy analyst. “It’s about laying the foundation for jobs, education, and long-term prosperity.”
