“State capture in Liberia undermines economic development by distorting institutions, weakening investor confidence. Liberian elites manipulate political and economic institutions to serve their interests.” African Development Bank (AfDB), 2025
The African Development Bank (AfDB) has issued a strong warning about the impact of state capture on Liberia’s economic future, highlighting how elite manipulation of institutions is distorting governance and eroding investor confidence.
According to the Bank, state capture, where powerful private interests or political elites dominate the processes of rulemaking and enforcement, has resulted in a governance system that obstructs sustainable growth and discourages investment, particularly in key sectors such as agriculture, infrastructure, and manufacturing.
The report noted that Liberia’s political elites often manipulate public institutions for personal or political gain. This leads to selective law enforcement, policy favoritism, and a dual legal system that fosters uncertainty and hinders long-term economic planning.
As a result, the management of the country’s natural, human, financial, and social capital has been significantly undermined.
Political instability and elite interference in policymaking were cited as factors contributing to abrupt and unpredictable regulatory changes.
The Bank warned that Liberia’s legacy of political and economic exclusion, unresolved land disputes, and weak protection of property rights, particularly in rural areas, continues to prevent individuals and businesses from using assets as collateral or making long-term investments.
The AfDB also raised red flags about contract enforcement. It pointed to prolonged legal proceedings, a fragile judiciary, and governance inefficiencies as key factors undermining trust in business transactions.
Such conditions create a high-risk environment that drives both domestic and international investors toward more stable economies.
“To reverse these trends, Liberia must urgently strengthen the rule of law,” the report emphasized. “Judicial independence, land tenure reform, and consistent regulatory enforcement are critical to rebuilding investor trust.”
While acknowledging positive steps such as the Liberia Extractive Industries Transparency Initiative (LEITI), the AfDB called for such transparency efforts to be expanded across all sectors to ensure accountability and investor confidence.
The report also urged Liberia to draw lessons from peer countries like Botswana and Rwanda, where strong governance and legal reforms have significantly improved investment climates.
Botswana’s stable political environment and sound legal institutions have drawn sustained foreign investment in its diamond industry, while Rwanda’s focus on regulatory clarity and anti-corruption reforms has attracted capital into agriculture, infrastructure, and services.
According to the AfDB, Liberia can achieve similar results by prioritizing institutional reforms, securing property rights, and ensuring transparent, accountable public institutions that serve the national interest.
“Addressing state capture is not just a legal or political imperative, it is a foundational step toward sustainable development,” the report concluded. “By upholding the rule of law and ensuring institutions work for the public good, Liberia can unlock its full economic potential and build a more inclusive and prosperous future.”
