1.1 Introduction

1. Liberia is on the move. After decades of economic mismanagement and fourteen years of brutal civil war, Liberia’s national nightmare is over. The country has been at peace since 2003. Two rounds of free and fair elections in 2005 led to the inauguration of a new government in January 2006. The economy is expanding rapidly, with growth accelerating to over 9 percent in 2007. Roads and buildings are being rebuilt, health clinics and schools are re–opening and agricultural production is increasing. The Government is introducing a broad set of policies to foster peace, accelerate reconstruction and development, and build strong systems of governance. There is a long way to go, but Liberia has launched its recovery and is poised for rapid, inclusive, and sustainable development in the years to come.

2. Liberia’s Poverty Reduction Strategy (PRS) articulates the Government’s overall vision and major strategies for moving toward rapid, inclusive and sustainable growth and development during the period 2008–2011. Specifically, the PRS will be implemented between April 1, 2008 and June 30, 2011 (the end of the 2010/2011 fiscal year). This period is of critical importance as Liberia shifts from post–conflict stabilization to laying the foundation for inclusive and sustainable growth, poverty reduction, and progressing toward the Millennium Development Goals (MDGs). The PRS builds on the Government’s first 150–day action plan and its interim PRS (iPRS), and has been formulated through broad–based consultation with Liberian citizens in cities, towns, and villages throughout the country, members of the business community, civil society groups, the Legislature, and international partner organizations. The Government sees the three–year PRS not as an end in itself, but as the next step in a process toward long–term development that will continue well beyond 2011, when it will develop the next phase of its strategy.

3. This opening chapter provides the context for the PRS by describing the conflict and economic collapse, the transition beyond conflict, and the initial progress achieved during the past two years. It stresses that for Liberia to be successful, it cannot simply recreate the economic and political structures of the past, which produced widespread income disparities, economic and political marginalization, and deep social cleavages, and ultimately fuelled the conflict. Liberia must create much greater economic and political opportunities for all its citizens and ensure that growth and development are widely shared, with the benefits spread much more equitably throughout the population. It must also directly address the consequences and legacies of decades of destruction, division and distrust, recognize and respond to the structural risk factors that predispose the country to violent conflict, and identify opportunities for institutionalizing peace.

1.2 Conflict and Collapse

4. The starting point for Liberia’s PRS is the country’s initial recovery from its long and brutal civil conflict. The war killed an estimated 270,000 people, created hundreds of thousands of refugees and internally displaced persons (IDPs), and shattered the lives of thousands of others. It destroyed basic institutions of governance as well as significant physical infrastructure and social capital. The economy collapsed, impoverishing much of the Liberian population.

5. The origins of the conflict can be traced to two broad factors. First, significant portions of society were systematically excluded and marginalized from institutions of political governance and access to key economic assets. The founding constitution was designed for the needs of the settler population, with less consideration and involvement of the indigenous people. In the early days, land and property rights of the majority of Liberians were severely limited. Later, marginalization was perpetuated by the urban–based policies of successive administrations. Political power was concentrated in Monrovia and primarily at the level of the Presidency. Most infrastructure and basic services were concentrated in Monrovia and a few other cities. Marginalization of youth and women and the mismanagement of national resources were widespread, which contributed to stark inequalities in the distribution of benefits.

6. The over–concentration of power bred corruption, restricted access to the decision–making process, and limited the space for civil society participation in governance processes. The consequence was a high level of resentment toward the ruling elite, which in part led to the bloody military coup of 1980 and its initial support among the people. The military and successive governments however failed to correct the ills of society and magnified the problems.

7. Second, economic collapse helped to propel the crisis. Liberia’s economy posted steady economic growth averaging 4 to 7 percent per year through the 1960s, but most of the gains were also concentrated within the elite, and the majority of Liberians saw little benefit. The economy began to unravel in the 1970s with the combination of a sharp increase in world petroleum prices and a decline in the prices of key export commodities. By the latter part of the decade all indicators pointed to a looming crisis. Unemployment and consumer prices, and particularly food prices, all rose at alarming rates, while growth stagnated, and tensions rose sharply.

8. The April 1980 coup d'état marked the beginning of Liberia’s steep descent into crisis. A decade of mismanagement and dictatorship led to the outbreak of civil war in late 1989 and 14 subsequent years of chaos, plunder, and violence which did not end until the arrival of international peacekeepers, the ousting of the Taylor Government, and the signing of the Accra Comprehensive Peace Agreement (CPA) in 2003.

9. The damage and negative consequences of the conflict were enormous. Commercial and productive activities ceased as various warlords looted and vandalized the country. Families were shattered; entire communities were uprooted; and social, political, economic, and traditional governance systems were destroyed. There was a massive exodus of skilled and talented individuals from the country. The economy completely collapsed. GDP fell a catastrophic 90 percent between 1987 and 1995, one of the largest economic collapses ever recorded in the world (Figure 1.1). By the time of the elections in 2005, average income in Liberia was just one–quarter of what it had been in 1987, and just one–sixth of its level in 1979.

Evolution of GDP per capita, 1960–2007

(constant 2004 US$)

Citation: IMF Staff Country Reports 2008, 219; 10.5089/9781451822984.002.A001

Source: World Bank, World Development Indicators

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Evolution of GDP per capita, 1960–2007

(constant 2004 US$)

Citation: IMF Staff Country Reports 2008, 219; 10.5089/9781451822984.002.A001

Source: World Bank, World Development Indicators

• Download Figure
• Download figure as PowerPoint slide

Evolution of GDP per capita, 1960–2007

(constant 2004 US$)

Citation: IMF Staff Country Reports 2008, 219; 10.5089/9781451822984.002.A001

Source: World Bank, World Development Indicators

• Download Figure
• Download figure as PowerPoint slide

10. The decline was felt across the board (Table 1.1). Agricultural production dropped as people fled their farms and the supporting infrastructure collapsed, mining and timber activities shut down, rubber plantations closed, manufacturing essentially stopped, and services ground to a halt. Production of iron ore and timber, as well as mining and panning, ceased completely. Rice production fell 76 percent between 1987 and 2005, financial services fell 93 percent, and electricity and water fell 85 percent. Transportation and communication, trade and hotels, and construction all fell around 69 percent. Only the production of charcoal and wood increased as Liberians turned to these products to meet their basic energy needs.

Table 1.1:

Value Added by Sector in Liberia, 1987–2005

(constant 1992 US$)

Source: Government of Liberia and IMF staff estimates

Table 1.1:

Value Added by Sector in Liberia, 1987–2005

(constant 1992 US$)

		1987	2005	Decline (%)
Real GDP		1167.0	401.7	65.6
Agriculture & fisheries		368.7	177.9	51.8
	Rubber	59.9	41.5	30.7
	Coffee	0.9	0.1	90.8
	Cocoa	5.9	1.2	79.5
	Rice	117.1	28.4	75.7
	Cassava	57.4	44.0	23.3
	Other	127.6	62.7	50.9
Forestry		56.6	59.0	–4.3
	Logs & timber	34.4	0.0	100.0
	Charcoal & wood	22.2	59.0	–166.2
Mining & panning		124.9	0.7	99.4
	Iron ore	116.2	0.0	100.0
	Other	8.7	0.7	91.9
Manufacturing		86.9	51.7	40.5
	Cement	23.0	14.9	35.5
	Beverages & beer	52.5	33.7	35.9
	Other	11.4	3.2	71.8
Services		529.9	112.3	78.8
	Electricity & water	18.2	2.7	85.3
	Construction	39.0	8.0	79.4
	Trade, hotels, etc	71.5	19.2	73.1
	Transportation & communication	89.5	27.6	69.2
	Financial institutions	141.8	10.0	93.0
	Government services	129.0	31.5	75.6
	Other services	40.9	13.3	67.4

Source: Government of Liberia and IMF staff estimates

View Table

Table 1.1:

Value Added by Sector in Liberia, 1987–2005

(constant 1992 US$)

		1987	2005	Decline (%)
Real GDP		1167.0	401.7	65.6
Agriculture & fisheries		368.7	177.9	51.8
	Rubber	59.9	41.5	30.7
	Coffee	0.9	0.1	90.8
	Cocoa	5.9	1.2	79.5
	Rice	117.1	28.4	75.7
	Cassava	57.4	44.0	23.3
	Other	127.6	62.7	50.9
Forestry		56.6	59.0	–4.3
	Logs & timber	34.4	0.0	100.0
	Charcoal & wood	22.2	59.0	–166.2
Mining & panning		124.9	0.7	99.4
	Iron ore	116.2	0.0	100.0
	Other	8.7	0.7	91.9
Manufacturing		86.9	51.7	40.5
	Cement	23.0	14.9	35.5
	Beverages & beer	52.5	33.7	35.9
	Other	11.4	3.2	71.8
Services		529.9	112.3	78.8
	Electricity & water	18.2	2.7	85.3
	Construction	39.0	8.0	79.4
	Trade, hotels, etc	71.5	19.2	73.1
	Transportation & communication	89.5	27.6	69.2
	Financial institutions	141.8	10.0	93.0
	Government services	129.0	31.5	75.6
	Other services	40.9	13.3	67.4

Source: Government of Liberia and IMF staff estimates

11. Basic infrastructure was destroyed. Many roads are now impassable, which seriously constrains economic recovery, as well as the provision of basic services such as health and education. The grossly inadequate road infrastructure also impedes peacebuilding efforts by limiting economic opportunities, constraining the ability of police and other security forces to operate effectively, and weakening national cohesiveness and integration. There was no electricity or piped water in the country for 15 years until the new Government turned on some water and electricity in Monrovia in July 2006. Unemployment soared, and poverty increased sharply, with nearly 64 percent of Liberians now living below the poverty line.¹ Schools, hospitals, and clinics are badly damaged, and most government buildings are in shambles. Today there are only 51 Liberian physicians to cover the nation’s public health needs, approximately one for every 70,000 Liberians. About 70 percent of school buildings are partially or wholly destroyed, and over half of Liberian children and youth are estimated to be out of school. A whole generation of Liberians has spent more time at war than in the classroom. Public finances collapsed, with annual revenue falling to US$85 million, allowing per capita public expenditure of about US$25, one of the lowest levels in the world. The Government defaulted on its debts in the mid–1980s, and by 2006 external debt had soared to US$4.5 billion, equivalent to 800 percent of GDP and 3,000 percent of exports. Domestic debt and arrears added an additional US$900 million, of which about US$300 million was ultimately deemed valid by external auditors.

1.3 Initial Actions and the Emerging Recovery

12. Liberia began to stabilize and recover following the 2003 peace agreement. United Nations peacekeepers and others in the international community contributed significantly to consolidating the peace, assisting with the successful 2005 elections, and supporting Liberia’s recovery efforts. The new Government introduced a strong set of policy reforms to spur reconstruction and development, and the economy is on the rebound. Economic growth reached an estimated 5.3 percent in 2005, an estimated 7.8 percent in 2006, and further accelerated to an estimated 9.5 percent in 2007. Many storefronts are newly painted, shelves are restocked, and business is expanding. Families are repairing their homes. Hotels and restaurants are re–opening. Trucks are lining up at building supply stores and small construction projects are evident throughout the country. Road construction is underway, and schools and clinics have reopened. Road and port traffic has increased markedly. Agricultural production is recovering, and foreign investment is rising.

13. Most importantly, hope has been restored. While many challenges lie ahead, Liberians are optimistic about the future for the first time in decades. This hope and optimism was exhibited by the enthusiasm of citizens during the PRS consultative process, some of whom walked for more than 15 hours to attend district and county–level meetings.

14. The programs and policies implemented by the new Government and its international partners have helped stimulate the recovery. The Government’s initial aims were to implement mutually reinforcing policies aimed at political stability, inclusive economic recovery and the restoration of basic services. It began to rehabilitate institutions, rebuild infrastructure and invest in health and education programs. Its initial strategy was articulated in the plan for the Government’s first 150 days and in the iPRS. Both were organized around a framework with four basic Pillars, upon which the PRS is also based:

• expanding peace and security;

• revitalizing the economy;

• strengthening governance and the rule of law; and

• rehabilitating infrastructure and delivering basic services.

15. Expanding peace and security. The Government has begun to rebuild the full range of its security forces and has made substantial progress in reintegrating refugees and IDPs, with strong support from its international partners. It has demobilized and reintegrated over 90,000 ex–combatants–11,780 of whom were children–through formal reintegration programs, and deactivated or retired over 17,000 members of the Armed Forces of Liberia (AFL), the Liberian National Police (LNP), and the Special Security Service (SSS). At the same time, it has begun to recruit and train the new AFL and police force. Over 1,100 AFL recruits (of an eventual 2,000) have already completed their first phase of training, and more than 3,500 police officers have completed academy training. The government has renovated the Police Academy Training Facilities and concluded plans for the construction of 10 county headquarters and 15 police depots around the country. Alongside its international partners, the Government has provided support and temporary cash assistance to over 108,000 exiled refugees and 325,000 registered IDPs. In addition, tens of thousands more have returned to their communities outside of formal programs. The Government is currently preparing itself for large numbers of refugees being repatriated from the West Africa sub–region, including approximately 40,000 who were hosted in Ghana.

16. Revitalizing the economy. The Government has taken a range of measures to overhaul its financial management systems and to spur renewed economic activity. It moved quickly to introduce a cashbased balanced budget and new expenditure control mechanisms, and strengthened enforcement and collection of customs duties and other taxes. As a result of these and other steps, revenues for the FY 2007/2008 are expected to be more than double the amount for FY 2005/2006. The Government endorsed and is implementing the Governance and Economic Management Assistance Program (GEMAP), which provides international experts to support several key financial agencies of the Government. It also successfully implemented two IMF Staff–Monitored Programs under which it made significant improvements in public finances and in monetary and exchange rate polices, paving the way to full restoration of normalized relations with the IMF in March 2008. It also joined the Extractive Industries Transparency Initiative (EITI) to strengthen accountability and transparency in managing funds generated through natural resource–based activities. To further strengthen financial management, the Government submitted legislation to formally merge the Bureau of the Budget with the Ministry of Finance, as well as legislation to limit the discretion of the Government to change budget allocations between ministries and agencies without approval of the Legislature to a cumulative total of 30 percent. The latter was recently adopted by the legislature after reducing the threshold to twenty percent.

17. To begin the revitalization of key economic activities, the new Government in early 2006 immediately cancelled all forestry contracts and reviewed 95 contracts and concessions granted by the National Transitional Government of Liberia, and subsequently passed a Forest Reform Act to strengthen oversight and regulation of the forestry sector. These steps paved the way for the United Nations Security Council to lift the sanctions on Liberian timber exports, and should lead to a rapid recovery in the timber sector during the PRS period. The Government completed negotiations with ArcelorMittal and the Firestone Rubber Company to revise major concession agreements to increase the benefits for the Liberian people and concluded new agreements to re–start oil palm production. It distributed over 40,000 tools and 20 metric tons of seed rice to some 33,000 farmers throughout the country in 2006, with even larger amounts in 2007. It worked to increase employment throughout the country through community development projects, food for work programs, road building programs, urban cleanup projects, and the revitalization of agriculture. The Government has also made strong initial progress in dealing with its debt situation. It formulated and began implementation of a comprehensive domestic debt resolution strategy, cleared its long–standing arrears to the World Bank, the African Development Bank, and the IMF, signed a new three–year agreement with the IMF, and reached the Decision Point under the Heavily Indebted Poor Countries’ (HIPC) Initiative.

18. Strengthening governance and the rule of law. The Government moved quickly to introduce a requirement that the President, all Cabinet Ministers, and all commissioned officers publicly declare their assets, and submitted to the Legislature a new Code of Conduct for all public officials. It developed and began to implement a comprehensive anti–corruption strategy, which included the submission of legislation to establish an Anti–Corruption Commission with prosecutorial powers. It took a strong stance against impunity by initiating court proceedings against a range of former senior government officials. It also began the process of civil service reform, including the removal of more than 7,000 “ghost” employees from the Government payroll, and the settling of civil servants’ arrears for periods ranging between six to eighteen months. The Government recognizes that many of the governance problems of the past have their roots in the excessive concentration of power in the Executive and in Monrovia. Toward that end, it has worked to strengthen the Legislature by, among other steps, giving it more power over budgetary issues, introducing measures on a wide range of issues for legislative approval, increasing its administrative budget, and establishing a Women’s Legislative Caucus with membership from both Upper and Lower Houses. To begin the process of decentralization, County Support Teams were established to support County Superintendents and Assistant Superintendents in all 15 counties. Children’s Assemblies and a National Children’s Parliament were also formed to ensure children’s participation in governance issues.

19. Rehabilitating infrastructure and delivering basic services. The Government initiated the rehabilitation of four major highways, many secondary roads, as well as bridges, culverts, and drainage facilities in several areas around the country. Electricity connections and pipe–borne water were restored to some parts of Monrovia for the first time in 15 years. Government has rebuilt and reopened many schools throughout the country, and provided over 13,000 pieces of school furniture. To encourage families to send their children to school, it abolished tuition and fees for public primary schools, and significantly reduced tuition and fees for public secondary schools, leading to a 44 percent increase in school enrolments. To rehabilitate public health services, it restored services to over 350 health facilities around the country, and rehabilitated more than 20 clinics and several hospitals and health centers. It immunized over 95 percent of children under five against measles, distributed over 125,000 mosquito nets, and trained over 3,500 health workers in malaria case management. The Government also provided HIV and AIDS prevention services to the general population, particularly to high risk groups, as well as treatment and care services to people living with HIV and AIDS.

1.4 Implementing the PRS

20. As the above achievements and others show, Liberia has made substantial progress in the last two years. Many challenges lie ahead, but with strong support from its partners and the eager participation of the Liberian people, the Government has laid the foundation for rapid, inclusive and sustainable growth and development in the years to come. With the country at peace and the initial recovery now clearly under way, Liberia is committed to developing institutions and supporting practices and attitudes that strengthen the prospects for peace. It is well–positioned to continue expanding economic opportunities, delivering basic services throughout the country, and re–building an accountable government that is focused on poverty reduction. It will do so in a manner sensitive to the needs of women, children and persons with disabilities, and to the challenges of environmental degradation and HIV and AIDS.

21. The reform agenda in this PRS is ambitious. While each reform is considered to be achievable, there are many factors that may affect the ability of the Government to successfully implement the whole PRS. These include:

• the ready availability and coordinated disbursement of financing;

• leadership, administrative and technical capacity;

• external stability and economic contagion effects;

• internal security; and

• the realization of economic growth projections.

22. The chapters that follow set out the strategy, as well as the potential risks and constraints in more detail.

3.1 Introduction

1. Years of conflict and mismanagement have left Liberia one of the poorest countries in the world, with GDP per capita estimated at US$190.² Poverty is pervasive, and is particularly acute in rural areas and the most remote corners of the country. Poverty has many dimensions, including low levels of income and consumption, poor nutrition and food security, low health and education indicators, and inadequate infrastructure. It is reinforced by inequities, especially in access to justice and economic opportunities. This chapter examines the available information on key characteristics of poverty in Liberia.

3.2 Methods of Measuring Poverty and Sources of Data

2. When Liberia developed its interim PRS (iPRS) in late 2006, there was little reliable information on poverty across the country. In preparation for the full PRS in 2007, three new sources of data became available. First, the Liberian Institute of Statistics and GeoInformation Services (LISGIS) carried out a Core Welfare Indicator Questionnaire (CWIQ) survey in collaboration with various partners.³ The CWIQ surveyed 3,600 households, covering every region, demographic group, income level, and household type. It gathered detailed information on both objective measures and perceptions of poverty. It focused primarily on consumption, and collected complementary data on household composition by size and age, education levels, occupation, and access to basic services.

3. Second, the 2007 Liberia Demographic and Health Survey (LDHS) collected data from a nationally representative sample of over 7,000 households between December 2006 and April 2007.⁴ The LDHS focused on population and health, and included information on fertility levels and preferences, family planning practices, sexual activity, nutrition levels, maternal and child health, domestic violence, and awareness and prevalence of HIV and AIDS.

4. Third, a Participatory Poverty Assessment (PPA) survey was conducted,⁵ which elicited perceptions of poverty based on direct information provided by the Liberian people themselves. The PPA complements other surveys by providing a basis to qualitatively define poverty across all 15 counties.

5. The information from these three sources, combined with other data and analyses, provide an initial outline of the nature and scope of poverty in Liberia. In all three cases, however, the results should be seen as preliminary. They can be compared with earlier estimates of poverty, but only with caution, as earlier approaches used different methodologies and their results may have been skewed by effects related to the conflict.

6. LISGIS and other institutions are therefore in the process of collecting more detailed data on the correlates and causes of poverty, and their trends over time. Of particular importance will be the March 2008 Population and Housing Census,⁶ the first national census since 1984. Despite these limitations, the data that are now available provide solid initial estimates of the dimensions of poverty in Liberia in 2007.

3.3 Income and Consumption Dimensions of Poverty

3.3.1 Measuring Rural and Urban Poverty Lines

7. The CWIQ survey focused on consumption (per equivalent adult) rather than income, for two reasons. First, consumption is better measured in household surveys than income, especially since net income is difficult to measure where most of the population works in the informal sector. Second, consumption is a better indicator than income of welfare and a household’s standard of living.

8. The survey calculated rural and urban poverty lines based on the cost of basic needs, in two parts. First, it estimated urban and rural food poverty lines derived from the cost of a food basket providing 2,400 Kcal per day per adult equivalent. Second, it computed non–food poverty lines by estimating the non–food spending of households whose food expenditures were within five percent of the food poverty line. The total poverty line is the sum of the two, while the food poverty line is the basis for measuring “extreme” poverty. The poverty line estimates are shown in Table 3.1.

Table 3.1:

Poverty Lines for Liberia, 2007

(annual, per equivalent adult)

^*based on an exchange rate of LD/USD = 60/1.

Source: CWIQ 2007

Table 3.1:

Poverty Lines for Liberia, 2007

(annual, per equivalent adult)

	Food Poverty Line		Non–Food Poverty Line		Total Poverty Line
	(Extreme Poverty)
	LD	USD*	LD	USDD*	LD	USDD*
Rural	14,514	242	6,910	115	21,424	357
Urban	14,431	241	15,793	263	30,224	504

^*based on an exchange rate of LD/USD = 60/1.

Source: CWIQ 2007

View Table

Table 3.1:

Poverty Lines for Liberia, 2007

(annual, per equivalent adult)

	Food Poverty Line		Non–Food Poverty Line		Total Poverty Line
	(Extreme Poverty)
	LD	USD*	LD	USDD*	LD	USDD*
Rural	14,514	242	6,910	115	21,424	357
Urban	14,431	241	15,793	263	30,224	504

^*based on an exchange rate of LD/USD = 60/1.

Source: CWIQ 2007

3.3.2 Estimates of the Extent of Consumption Poverty

9. The main finding of the CWIQ is that 63.8 percent of Liberians live below the poverty line (Table 3.2). This implies that 1.7 million Liberians are living in poverty. Of these, about 1.3 million people are living in extreme poverty, equivalent to 48 percent of the population. Poverty is higher in rural areas (67.7 percent) than in urban areas (55 percent).⁷ Since about 70 percent of the population lives in rural areas, about three–quarters (73 percent) of the poor live in rural areas.

Table 3.2:

Liberia 2007 Poverty Profile (based on consumption per equivalent adult)⁸

Source: Calculated using CWIQ 2007, LISGIS

Table 3.2:

Liberia 2007 Poverty Profile (based on consumption per equivalent adult)⁸

								Number of	Contribution to
		Poverty Headcount			Share of the Population			Poor	Poverty
		Urban	Rural	National	Urban	Rural	National	National	National
National		55.1	67.7	63.8	100	100	100	1725806	100
Urban/rural location
	Urban	55.1	–	55.1	30.9	–	30.9	459570	26.6
	Rural	–	67.7	67.7	–	69.1	69.1	1266236	73.4
Region
	Greater Monrovia	48.5	–	48.5	71.4	–	22	288695	16.7
	North Central	57.5	68.9	68.1	8.1	48.2	35.8	660129	38.3
	North Western	82.4	75.5	76.3	3.7	12.8	10	206547	12
	South Central	74.4	55.9	58.9	8.9	19.9	16.5	262678	15.2
	South Eastern A	76.7	76.6	76.7	5.6	10.2	8.8	181713	10.5
	South Eastern B	79.2	65.9	67.2	2.3	9	6.9	126044	7.3
Age of the individual
	Less than 10	57.5	65.4	63.3	25.0	30.9	29.1	498036	28.9
	10 thru 19	57.6	72.5	67.4	26.5	22.7	23.8	434748	25.2
	20 thru 29	51.1	66.1	61.0	18.2	15.6	16.4	270650	15.7
	30 thru 39	50.8	65.1	60.2	13.7	11.9	12.4	202640	11.7
	40 thru 49	52.7	69.4	64.3	9.3	9.4	9.4	163259	9.5
	50 thru 59	57.2	67.3	64.5	4.2	4.8	4.6	80699	4.7
	60 and Over	60.3	68.0	66.2	3.1	4.7	4.2	75775	4.4
Gender of the head
	Male	54.1	68.8	64.6	70	76.2	74.3	1297787	75.2
	Female	57.2	64.1	61.6	30	23.8	25.7	428019	24.8

Source: Calculated using CWIQ 2007, LISGIS

View Table

Table 3.2:

Liberia 2007 Poverty Profile (based on consumption per equivalent adult)⁸

								Number of	Contribution to
		Poverty Headcount			Share of the Population			Poor	Poverty
		Urban	Rural	National	Urban	Rural	National	National	National
National		55.1	67.7	63.8	100	100	100	1725806	100
Urban/rural location
	Urban	55.1	–	55.1	30.9	–	30.9	459570	26.6
	Rural	–	67.7	67.7	–	69.1	69.1	1266236	73.4
Region
	Greater Monrovia	48.5	–	48.5	71.4	–	22	288695	16.7
	North Central	57.5	68.9	68.1	8.1	48.2	35.8	660129	38.3
	North Western	82.4	75.5	76.3	3.7	12.8	10	206547	12
	South Central	74.4	55.9	58.9	8.9	19.9	16.5	262678	15.2
	South Eastern A	76.7	76.6	76.7	5.6	10.2	8.8	181713	10.5
	South Eastern B	79.2	65.9	67.2	2.3	9	6.9	126044	7.3
Age of the individual
	Less than 10	57.5	65.4	63.3	25.0	30.9	29.1	498036	28.9
	10 thru 19	57.6	72.5	67.4	26.5	22.7	23.8	434748	25.2
	20 thru 29	51.1	66.1	61.0	18.2	15.6	16.4	270650	15.7
	30 thru 39	50.8	65.1	60.2	13.7	11.9	12.4	202640	11.7
	40 thru 49	52.7	69.4	64.3	9.3	9.4	9.4	163259	9.5
	50 thru 59	57.2	67.3	64.5	4.2	4.8	4.6	80699	4.7
	60 and Over	60.3	68.0	66.2	3.1	4.7	4.2	75775	4.4
Gender of the head
	Male	54.1	68.8	64.6	70	76.2	74.3	1297787	75.2
	Female	57.2	64.1	61.6	30	23.8	25.7	428019	24.8

Source: Calculated using CWIQ 2007, LISGIS

10. The poverty headcount indices are highest in the Southeastern A region (77 percent) and Northwestern region (76 percent), followed by the North Central region (68 percent) and the Southeastern B region (67 percent) (see Figure 3.1). The North Central region, which contains a much larger share of the population than other regions, has by far the largest number of people living in poverty: 660,000, or about 38 percent of the national total. These statistics are consistent with findings of the PRS County Consultations.

Poverty Head Count⁹

Citation: IMF Staff Country Reports 2008, 219; 10.5089/9781451822984.002.A001

Source: LISGIS 2007

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Poverty Head Count⁹

Citation: IMF Staff Country Reports 2008, 219; 10.5089/9781451822984.002.A001

Source: LISGIS 2007

• Download Figure
• Download figure as PowerPoint slide

Poverty Head Count⁹

Citation: IMF Staff Country Reports 2008, 219; 10.5089/9781451822984.002.A001

Source: LISGIS 2007

• Download Figure
• Download figure as PowerPoint slide

11. According to the CWIQ results, there are only small differences in poverty measures by the gender of the head of the household, small enough to fall within the sampling margin of error. The survey finds that 65 percent of male–headed households live below the poverty line, compared to 62 percent of female–headed households. Similarly, the PPA found that women are perceived as having a lower poverty incidence than men (42 percent to 53 percent). Over two–thirds of PPA respondents perceive men and women to have equal opportunities for employment. Some believe women are favored in the workplace and that they are more likely to participate in economic activity (particularly agricultural labor) to provide food for the family. Despite the perceptions, the reality is that women remain vulnerable to poverty in many dimensions. The majority of female labor in Liberia is unpaid and concentrated in the informal sector, and this work is characterized by insecurity and low productivity. While Liberian women are very active in the labor market, the nature of their work may not necessarily lead them to a sustained path of poverty reduction. Moreover, the incidence of gender based violence (GBV) is high in Liberia (particularly rape and sexual assault, especially of minors), limiting women’s and girls’ ability to cope with poverty and lead a safe life (See box on GBV, Chapter Six).¹⁰ When other non–income dimensions of poverty are taken into account, the vulnerability of women and girls becomes even more apparent, as described below.

12. There is relatively little variation in the incidence of poverty across age groups, although at 67.4% the percentage below the poverty line is highest among children/youth aged 10–19. (See Table 3.2.) A higher level of education of the household head is associated with lower levels of poverty, and poverty levels are highest for those engaged in fishing, crop farming, mining/quarrying, and those who are unemployed or inactive. By contrast, poverty levels are lowest for those in the banking and financial sector, followed by employees of utilities, and poverty levels are lower where heads of households have a second occupation.

3.4 Non–Income Dimensions of Poverty

14. The situation with respect to non–income dimensions is mixed. While the majority of Liberians—particularly the rural poor—perceive the security situation to be much better now than it was a year ago, they continue to express major concerns with the lack of access to basic services, markets, and food; high unemployment rates; poor housing; quality and coverage of basic infrastructure; and the quality of governance. There are some areas of progress: gross primary school enrolment is high at approximately 90 percent, and under–5 mortality is on the decline.¹⁶

3.4.3 Health

23. Poor health contributes significantly to poverty in Liberia, and health systems are in a state of disrepair in the aftermath of the conflict. Life expectancy at birth is just 45 years.²³ There are only 51 Liberian physicians and 297 nurse midwives (excluding trained traditional midwives) to cover public health needs. Out of the 325 health facilities available before the war, about 95 percent were partially or wholly destroyed. A survey undertaken in 2006 indicated that only 10 percent of communities reported having a health facility within the community, and more than 50 percent of PPA respondents claim to have no health facility in their community.²⁴ Liberians’ major concerns about the health sector revolve around their lack of financial and physical access to healthcare, as well as quality of healthcare delivery. In general, healthcare is more accessible and of better quality in urban areas than rural areas.

24. Several key health indicators have begun to improve since the end of the conflict, but remain poor. In particular, infant and under–five mortality rates have fallen sharply since 1999/2000 (Table 3.3). The infant mortality rate fell from 117 to 72 deaths per 1,000 live births, while under–five mortality fell from 194 to 111 deaths per 1,000 births. These declines can be attributed primarily to the end of the conflict, the restoration of basic services in some areas and increased immunization.

Table 3.3:

Basic Health Indicators

^*Doctor, nurse, midwife, or physician’s assistant.

Source: LDHS 2007 and LDHS 1999/2000

Table 3.3:

Basic Health Indicators

Indicator		1999/00	2007
Mortality Rates
	Infant (per thousand)	117	72
	Under 5 (per thousand)	194	111
	Maternal (per 100,000 live births)	578	994
Births Attended by Health Professional*(%)
	National	50.9	46.4
	Rural	82.4	78.8
	Urban	36.7	32.2

^*Doctor, nurse, midwife, or physician’s assistant.

Source: LDHS 2007 and LDHS 1999/2000

View Table

Table 3.3:

Basic Health Indicators

Indicator		1999/00	2007
Mortality Rates
	Infant (per thousand)	117	72
	Under 5 (per thousand)	194	111
	Maternal (per 100,000 live births)	578	994
Births Attended by Health Professional*(%)
	National	50.9	46.4
	Rural	82.4	78.8
	Urban	36.7	32.2

^*Doctor, nurse, midwife, or physician’s assistant.

Source: LDHS 2007 and LDHS 1999/2000

25. Maternal mortality remains high and appears to have increased in recent years from 578 (Year 2000) to 994 (Year 2007) deaths per 100,000 live births.²⁵ The main health factors contributing to the high level of maternal mortality include the acute shortage of skilled labor, inadequate emergency obstetric care, inefficient referral systems, poor nutritional status of pregnant women, high fertility rates and extremely high numbers of teenage pregnancies. Moreover, less than half of births are attended to by health professionals. (See Table 3.3.)

26. Although the total fertility rate in Liberia has decreased over the past two decades, fertility remains high at 5.2 children per woman and fertility in rural areas is significantly higher than in urban areas (6.2 children per woman as compared to 3.8).²⁶ Preliminary information from the 2007 LDHS suggests a high unmet need among married women for both spacing and limiting births. In Lofa County, one of those most affected by conflict, a reproductive health survey revealed a teenage pregnancy rate of over 68 percent among 15 to 19 year olds.²⁷ This is a very high rate, especially in a country in which 51 percent of the population is below 25 years of age.

27. HIV prevalence is estimated at 1.5 per cent.²⁸ The rate was found to be higher for women (1.8 percent) than for men (1.2 percent). Paradoxically, the HIV prevalence rate was recorded to be higher among persons with some level of education (2.1 percent for persons with secondary or higher levels of education and 1.3 percent for persons with only a primary level of education) than for persons with no form of education (1.0 percent). The likely explanation is that persons with some form of education are mostly based in urban areas, where the prevalence rate is higher. Although the HIV prevalence rate is higher for persons between the ages of 25 to 39 years, about 0.9 percent of young people 15 to 19 years old and 1.4 percent of persons 20 to 24 years old were found to be HIV positive.

28. Earlier sources of data, especially antenatal hospital records, indicated higher infection rates among pregnant women aged 15 to 24 years of age. While the results remain controversial, studies of these records showed an increase from 4.2 percent in 1994 to 12.9 percent in 2000. According to the PPA survey, a majority of people understand how HIV and AIDS spreads, and cite condoms or monogamy as prevention mechanisms. The vast majority (84 percent) feel compassion for people living with HIV and AIDS, although many are afraid that association with PLWHAs might lead to infection.²⁹ More information on the HIV prevalence rate is expected to be received during the PRS period.

3.5 Liberia and the Millennium Development Goals

31. The Millennium Development Goals (MDGs) are a set of eight goals that the international community has agreed to try to achieve by 2015 to respond to some of the world’s major development challenges. The eight goals range from halving extreme poverty to halting the spread of HIV and AIDS to providing universal primary education. They were established in 2000 and normally use 1990 as the benchmark for measuring progress for the 25–year period 1990–2015.

32. Achieving the MDGs will be a challenge for many developing countries, but it will be even more difficult for Liberia because of the legacy of the war. While most countries were making at least some progress toward the Goals between 1990 and 2003, Liberia was moving dramatically backwards and losing the capacity needed to achieve the Goals. All of Liberia’s indicators were worse in 2000 than they were in 1990. Thus, to achieve any of the Goals, Liberia must make larger gains in a shorter period of time than almost any other country. Nevertheless, the Government has been making steady progress toward the MDGs through a series of policies implemented in the 150–Day Action Plan and iPRS.

33. Liberia’s status on the eight MDG goals and the likelihood that it will achieve the MDGs by 2015 is shown in Table 3.5. This overview was compiled using data from the CWIQ, the LDHS, the Comprehensive Food Security and Nutrition Survey (CFSNS, 2006), the UN Statistical Database and other sources. Due to significant demographic changes and the unreliability of data compiled during the period of the conflict, the base year for trend projections is the year 2000 or the closest year possible.

Table 3.4:

Education and Literacy

Source: CWIQ 2007

Table 3.4:

Education and Literacy

	Net Primary	Net Secondary	Adult Literacy Rate, 15+ years
	School	School Enrolment	(%)
	Enrolment	(ages 12–17) (%)
	(ages 6–11) (%)
			Male	Female	Total
Total	37	15	69	41	55
Urban	48	25	85	63	74
Rural	33	10	61	31	45
Region
Greater Monrovia	50	27	88	67	77
North Central	31	12	64	34	49
North Western	49	11	54	31	42
South Central	26	12	63	33	48
South Eastern A	34	7	56	28	42
South Eastern B	46	12	76	39	57

Source: CWIQ 2007

View Table

Table 3.4:

Education and Literacy

	Net Primary	Net Secondary	Adult Literacy Rate, 15+ years
	School	School Enrolment	(%)
	Enrolment	(ages 12–17) (%)
	(ages 6–11) (%)
			Male	Female	Total
Total	37	15	69	41	55
Urban	48	25	85	63	74
Rural	33	10	61	31	45
Region
Greater Monrovia	50	27	88	67	77
North Central	31	12	64	34	49
North Western	49	11	54	31	42
South Central	26	12	63	33	48
South Eastern A	34	7	56	28	42
South Eastern B	46	12	76	39	57

Source: CWIQ 2007

Table 3.5:

“Status at a Glance” Liberia and the MDGs

Source: Liberia MDG Report 2006 with exception of:^* Extrapolated in 2008 by the joint Government–NGO Working Group on Water and Sanitation using a 2004 UNICEF survey as the base. These are the baseline indicators for the Government’s strategic objectives in Water and Sanitation, including the MDGs.

Table 3.5:

“Status at a Glance” Liberia and the MDGs

Goals	2000 status	Will goal be reached?	State of supportive environment	Monitoring capacity
Goal #1: Eradicate extreme poverty and hunger
Halve, by 2015, the proportion of people	64% (2007)	Unlikely	Improving	Weak
whose income is below the poverty line
Halve by 2015, the proportion of people that		Likely	Improving	Weak
suffer from hunger
Goal #2: Achieve Universal Primary Education
Ensure that, by 2015, children everywhere,	Net primary enrolment:	Unlikely	Improving	Weak
boys and girls alike, will be able to complete	37.3% (2007)
a full course of primary schooling
Goal #3: Promote gender equity and empower women
Eliminate gender disparity in primary and	Net primary enrolment:	Likely	Improving	Weak
secondary education, preferably by 2005,	37.5% boy, 37.1% girl
and in all levels of education no later than	(2007); net secondary
2015	enrolment: 16% boy,
	14.2% girl (2007)
Goal #4: Reduce child mortality
Reduce by two–thirds, between 1990 and	194/1,000 (1999/2000)	Probably	Improving	Weak
2015, the under–five mortality rate
Goal #5: Improve maternal health
Reduce by three–quarters, between 1990	578/100,000 live births	Unlikely	Worsening	Weak
and 2015, the maternal mortality ratio	(1999/2000)
Goal #6: Combat HIV and AIDS, malaria and other diseases
Have halted by 2015 and begun to reverse	HIV prevalence 1.5%	LikelyImproving		Weak
the spread of HIV and AIDS	(2007), malaria prevalence 66% among children under five 33
Have halted by 2015 and begun to reverse		Unlikely	Improving	Weak
the incidence of malaria and other major
diseases
Goal #7: Ensure environmental sustainability
Integrate the principles of sustainable development into country polices and programs and reverse the loss of environmental resources	Insufficient data	Insufficient data	Fair	Weak
Halve, by 2015, the number of people with–	Safe drinking water cov–	Likely	Fair	Weak
out sustainable access to safe drinking water	erage 25%, basic sani–
and basic sanitation	tation coverage 15%
	(2008)*
Have achieved by 2020 a significant improvement in the lives of at least 100 million slum dwellers	Insufficient data	Insufficient data	Fair	Weak
Goal #8: Develop a global partnership for development
Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term	HIPC Decision Point reached March 2008	Probably	Improving	Weak

Source: Liberia MDG Report 2006 with exception of:^* Extrapolated in 2008 by the joint Government–NGO Working Group on Water and Sanitation using a 2004 UNICEF survey as the base. These are the baseline indicators for the Government’s strategic objectives in Water and Sanitation, including the MDGs.

View Table

Table 3.5:

“Status at a Glance” Liberia and the MDGs

Goals	2000 status	Will goal be reached?	State of supportive environment	Monitoring capacity
Goal #1: Eradicate extreme poverty and hunger
Halve, by 2015, the proportion of people	64% (2007)	Unlikely	Improving	Weak
whose income is below the poverty line
Halve by 2015, the proportion of people that		Likely	Improving	Weak
suffer from hunger
Goal #2: Achieve Universal Primary Education
Ensure that, by 2015, children everywhere,	Net primary enrolment:	Unlikely	Improving	Weak
boys and girls alike, will be able to complete	37.3% (2007)
a full course of primary schooling
Goal #3: Promote gender equity and empower women
Eliminate gender disparity in primary and	Net primary enrolment:	Likely	Improving	Weak
secondary education, preferably by 2005,	37.5% boy, 37.1% girl
and in all levels of education no later than	(2007); net secondary
2015	enrolment: 16% boy,
	14.2% girl (2007)
Goal #4: Reduce child mortality
Reduce by two–thirds, between 1990 and	194/1,000 (1999/2000)	Probably	Improving	Weak
2015, the under–five mortality rate
Goal #5: Improve maternal health
Reduce by three–quarters, between 1990	578/100,000 live births	Unlikely	Worsening	Weak
and 2015, the maternal mortality ratio	(1999/2000)
Goal #6: Combat HIV and AIDS, malaria and other diseases
Have halted by 2015 and begun to reverse	HIV prevalence 1.5%	LikelyImproving		Weak
the spread of HIV and AIDS	(2007), malaria prevalence 66% among children under five 33
Have halted by 2015 and begun to reverse		Unlikely	Improving	Weak
the incidence of malaria and other major
diseases
Goal #7: Ensure environmental sustainability
Integrate the principles of sustainable development into country polices and programs and reverse the loss of environmental resources	Insufficient data	Insufficient data	Fair	Weak
Halve, by 2015, the number of people with–	Safe drinking water cov–	Likely	Fair	Weak
out sustainable access to safe drinking water	erage 25%, basic sani–
and basic sanitation	tation coverage 15%
	(2008)*
Have achieved by 2020 a significant improvement in the lives of at least 100 million slum dwellers	Insufficient data	Insufficient data	Fair	Weak
Goal #8: Develop a global partnership for development
Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term	HIPC Decision Point reached March 2008	Probably	Improving	Weak

Source: Liberia MDG Report 2006 with exception of:^* Extrapolated in 2008 by the joint Government–NGO Working Group on Water and Sanitation using a 2004 UNICEF survey as the base. These are the baseline indicators for the Government’s strategic objectives in Water and Sanitation, including the MDGs.

34. The first and most important Goal is to reduce poverty by half by 2015. In Liberia’s case, this would imply reducing the poverty headcount index from 63.8 percent to about 32 percent over the next seven years. Unfortunately, this is not realistically possible – it would require the fastest reduction in poverty ever recorded in the world.

35. Nevertheless, Liberia can achieve a reduction in poverty that is at least consistent with the spirit of the MDGs. The original intent of the MDGs was to reduce the poverty rate by 50 percent over 25 years or roughly 2 percent per year. In the case of Liberia, a 2 percent annual reduction in a headcount index of 63.8 percent translates into a reduction of approximately 1.3 percentage points per year,³¹ or about 4 percentage points over the three years of the PRS. This would bring the poverty headcount index to about 60 percent by 2011. Liberia can, and should, achieve this rate of poverty reduction (or even faster) during the PRS period and beyond, based on the projected economic growth rate (over 10 percent annually) and the policy actions described in this strategy. So while Liberia will not achieve the MDG on poverty per se by 2015, it is likely to achieve progress consistent with the MDGs.

36. With respect to the other MDGs, the outlook is similar; Liberia is likely to achieve progress consistent with or better than the MDGs, but in most cases it will not actually achieve them by 2015. Despite the obstacles, according to UN trend analysis,³² Liberia is likely to achieve several sub–targets of the MDGs on time (See Table 3.5.):

• Halving the proportion of people that suffer from hunger;

• Eliminating gender disparities in primary and secondary education;

• Reducing by two–thirds the under–five mortality rate;

• Halting the spread of HIV and AIDS; and

• Halving the number of people without access to safe drinking water.

3.6 Conclusion

38. Two key points emerge from this discussion. First, in the aftermath of the war, Liberia’s poverty statistics are grim. Almost two–thirds of Liberians live below the poverty line, and the share is even higher in rural areas. Indicators on health, education, water, food security and infrastructure are all poor. Women are particularly vulnerable to poverty, especially in rural areas, both because of the precarious nature of women’s employment and because of more limited access to basic services like health, education, and infrastructure.

39. Second, since the end of the conflict Liberia has made important progress in the effort to reduce poverty. Incomes are growing, school enrolments are increasing, health clinics are reopening, and infant mortality rates are falling. The outlook is positive for further progress during the PRS period.

40. The key to reducing poverty in Liberia during the PRS period will lie in achieving rapid, inclusive, and sustainable growth, as described further in Chapters Four and Seven. But rapid growth alone will be insufficient. All of the elements of Liberia’s reconstruction and development strategy play a role: consolidating peace and security, revitalizing the economy, strengthening governance and the rule of law, and rebuilding infrastructure and delivering basic services. The specific details of the Government’s strategy and its relationship to the poverty challenge are described in Chapters Six through Nine.

4.1 Introduction

1. At the core of Liberia’s poverty reduction strategy is rapid, inclusive and sustainable economic growth. Only through growth can individuals, households, and communities earn the income necessary to obtain the basic things they want and need: food, clothing, shelter, health care, education, and other vital goods and services. Sustained growth is also critical for making progress toward the MDGs, including reducing infant and maternal mortality, and increasing school enrolment.

2. But economic growth alone does not guarantee poverty reduction and stability. Worldwide experience also shows that the structure of growth is critical; to reduce poverty and achieve the MDGs, growth must be equitable and widely shared, and create employment and economic opportunities for the poor. It must reach traditionally excluded and vulnerable groups, including the poor in isolated villages, women, children and youth, and persons with disabilities. Moreover, to reduce poverty, rapid growth must be accompanied by increased access to basic services and more inclusive governance and political structures.

3. Liberia’s economic history before the conflict became a classic but sad example of “growth without development”,³⁴ a story that the Government is determined not to repeat. In the decades leading up to the conflict, the country recorded relatively rapid growth. But most of the income was channeled to a small elite and there was relatively little poverty reduction for the majority of Liberians. The inequities in growth were a major source of the resentment that fueled the conflict.

4. Liberia faces a range of challenges in building the foundation for rapid, inclusive and sustainable growth, including dilapidated infrastructure, weak education and health systems, malnutrition, high unemployment (especially of young men and women and persons with disabilities), inadequate skills and professional capacity, and weak governance systems. But the Government is committed to facing these challenges and creating much more equitable and inclusive economic and political structures, generating opportunities for historically marginalized groups, and widely sharing the benefits of growth and development. Liberia’s economic growth strategy will focus on creating widespread private sector opportunities for unskilled and semi–skilled workers, including the unemployed, disenfranchised young men and women, and persons with disabilities, through a robust agricultural sector, down–stream pro–cessing of natural resources, and in the longer term through competitive labor–intensive manufactures and services. The Government will establish a policy framework that keeps business costs low, supports long–term productivity growth, and strengthens the environment for both local and foreign investment in activities that can help integrate Liberia into competitive global markets. The private sector will be the primary driver of growth, from small family farms and roadside shops to medium and large–sized investments in agriculture, mining, construction, hotels, financial services and increasingly, light manufacturing.

4.2 Liberia’s Growth Potential

5. Liberia has a rich natural resource base, including fertile lands for agriculture and tree crops, extensive forestry resources, iron ore, gold, diamonds, and the ocean and coastal areas. Natural resource–based industries have the potential to create significant numbers of jobs, provide substantial budget revenues, and initiate rapid growth.

6. Agriculture is critical, since it can create employment and income opportunities for the majority of the Liberian people, particularly young men and women. A robust agriculture sector will enhance food security, both by providing food and income to farmers and by keeping food prices low for the rest of the country. There is significant potential for growth in agriculture over an extended period, as both total output and farm yields are very low in the aftermath of the conflict. Production in traditional food crops such as rice and cassava has already begun to rebound. Rehabilitating and expanding Liberia’s road network will be central to connecting farmers to markets, raising output, reducing prices for food and critical inputs, and stimulating supporting activities throughout the rural areas.

7. Over the medium term, rubber, palm oil, coffee, cocoa, and other cash crops have major potential. The aging stock of rubber trees and the poor state of many plantations may constrain growth in the near term. A key challenge is to replant trees and rehabilitate the plantations to provide the basis for sustained growth over the medium term. It also will be important to improve governance in the rubber sector, formalizing those plantations that currently operate outside the law and taxation system. The production of timber and forest products should also accelerate over the next few years as new concession agreements are signed, now that UN sanctions on timber have been lifted following the Government’s introduction of strong control and monitoring measures. Once again, an efficient road network will be central to sustained growth in these sectors.

8. Iron ore, diamonds, and other mining activities will begin to expand rapidly in the next few years, led by the ArcelorMittal iron ore mine concession, which is expected to bring Liberia US$1.5 billion in investment. The mining of iron ore once accounted for more than 10 percent of Liberia’s GDP, but production ceased during the war. It will take several years to reach full capacity as rail and port facilities are rebuilt, but the process is now underway. Gold and diamond extraction can also expand quickly, with the latter recently boosted by the lifting of UN sanctions.

9. Growth in these sectors will be complemented by expansion in construction activities, hotels, restaurants, retail trade, electricity, and other services. These activities can create significant numbers of jobs for unskilled and semiskilled workers, both men and women, and are therefore critical to ensuring that growth is inclusive and equitable. Construction is booming throughout the country as roads, bridges, houses, and other facilities are repaired or rebuilt. Other services are already rebounding quickly, and are likely to expand rapidly during the next several years.

10. These traditional engines of growth are critical for the initial recovery. But Liberia must take steps to ensure that the benefits are widely shared, and begin to build a much more diversified economy over time to achieve even more inclusive and sustainable growth.

11. Three steps are critical to ensure that the benefits from natural resources are widely shared, and Liberia is already taking initial steps in each area.

• First, the Government is committed to negotiating concession contracts that balance competitive returns for the investor with the need for sustained revenues for the people of Liberia. The secretive, special deals of the past that benefitted a few to the detriment of the majority will be replaced by transparent agreements with fairer terms and stronger mechanisms to ensure the proper distribution and spending of funds.

• Second, Liberia will ensure that all payments to, and revenues received by, the Government (including all royalty and tax payments) are publicly, transparently, and fully reported. The Government has already taken a major step forward in this area by becoming a candidate country under the Extractive Industries Transparency Initiative (EITI).

• Third, concession revenues will be used to promote public welfare by financing investments in roads, education, health, water, and other areas. These investments will create direct social and economic benefits for all Liberians including women, youth, and persons with disabilities. Concessionaires will be responsible for some provision of infrastructure and basic services inside the concession area. By creating new opportunities and expanding Liberians’ capabilities, concessionaires play an important role in ensuring that growth is inclusive and sustainable.

12. Although Liberia is endowed with rich natural resources that can help spur growth during the next several years, the country must aim to diversify the economy in order to sustain growth over time and to create new economic opportunities for Liberians across the country. Even if there are some successful developed country examples, few developing countries that have relied heavily on natural resource exports have achieved sustained economic growth over the last several decades. Natural resource production can create opportunities for corruption and generate so–called “Dutch Disease”: real appreciation of the currency, a loss of competitiveness, and weaker incentives for other export activities. Moreover, they typically do not generate sustained growth in productivity over time, which is the key to sustained wage and income growth.

13. Thus, while building on its comparative advantage in natural resources, Liberia will aim over the medium– to–long term to diversify into and increase the share of labor–intensive downstream processed products, other manufactures, and services as the basis for generating sustained growth in productivity, skill levels, wages, and income. Producing for export is essential, as export markets can expand, provide competition to ensure efficiency, and provide access to new technologies that are central to productivity growth.

14. Liberia has the potential for economic activity in agro–processing, horticulture, furniture and other downstream wood products, and downstream rubber products, and eventually in service industries. While wide–scale industrial development will not be achieved in the PRS implementation period, the strategy will lay the groundwork for diversifying the economy into activities that can eventually create significant numbers of jobs throughout the country for low–skilled and semi–skilled workers.

15. It is likely to take many years for the Liberian economy to diversify in this direction, but the Government is already taking purposeful steps to lay the necessary foundation. The key is to reduce production costs as much as possible to allow firms to compete. With the appropriate environment, Liberian firms could compete on regional and world markets for export.

16. An important first step in reducing costs and creating a competitive environment is rebuilding infrastructure, especially roads, the ports and power supplies. Another will be rebuilding Liberia’s education and health systems and its professional capacity in both the public and private sector. A particular challenge will be the absorption of the many young Liberians who were denied an education and had their transition from childhood to adulthood interrupted by war.

17. At the same time, the Government is committed to simplifying procedures, limiting discretionary and concentrated powers, reducing red tape, facilitating customs and port clearance, and eliminating unnecessary regulations. It will consider developing one or more Special Economic Zones (SEZs) to promote foreign direct investment, reduce production costs, diversify production, and facilitate the integration of Liberian firms into regional and global markets. Liberia has begun to revise its tax and investment codes with a view toward balancing the need for revenues with the need to increase economic efficiency and competitiveness, as well as reducing discretion in the provision of tax incentives. Liberia plans to reduce its income tax and duty rates while broadening the tax base and strengthening tax administration.

4.3 A Three–Pronged Growth Strategy

18. The structure of the Liberian economy and its potential for growth necessitates a three–pronged growth strategy.

• First, rebuild basic infrastructure, especially roads. Roads are critical for connecting Liberian farm communities to markets and reducing both the time and cost to move goods and services across the country. In the aftermath of the conflict, many communities are isolated for most, if not all, of the year. Roads reduce the costs of all products that rural communities purchase and increase the income they earn from their production. An expanded, efficient road network will create new economic opportunities for the rural poor throughout Liberia, including unemployed young men and women and persons with disabilities, and will make export products more competitive. Such a road network will also enhance security, facilitate decentralization of government services, and open access to health and education. In surveys and consultative meetings throughout the country, Liberians consistently pointed to roads as their number one priority. In addition, the rehabilitation and development of the energy sector is an integral part of the reconstruction and development strategy which, together with rebuilding ports and improving water supplies, will also reduce costs and make Liberian firms more competitive.

• Second, restore production in rubber, timber, mining, cash crops and other key natural resource products, and ensure that the benefits accrue to the nation as a whole and not to just a few. Liberia is not a poor country; it is a rich country that has been poorly managed. Going forward, it must manage its resource base to ensure the benefits are transparent and widely shared, that natural resources are utilized in a sustainable manner, and that natural resource production does not undermine the incentives for growth in other sectors.

• Third, reduce production costs to encourage diversification of the economy over the medium–to long term into competitive production of labor–intensive downstream products, manufactured goods, and services. Liberia has the potential to export to the West African region, Europe, the United States and other large markets in a range of products that can stimulate significant job growth. It must rebuild its infrastructure, reduce unnecessary regulations, encourage competition, eliminate red tape, and shorten the time and costs for port and customs clearance. It must implement a tax system that balances the need for revenues with the need for efficient, low–cost production. It also must rebuild its health and education systems, and its public and private sector professional capacity, in order to create opportunities for all Liberians to compete on global markets. Macroeconomic management will be central; Liberia must ensure that natural resource exports and aid flows do not lead to an appreciation of the real exchange rate that can undermine export competitiveness.

4.4 Liberia’s Initial Growth Acceleration

19. This three–pronged growth strategy is feasible, although the third prong can only bear fruit significantly beyond the three–year PRS implementation period. As Table 4.1 shows, the economic recovery is off to a strong start. GDP expanded 2.6 percent in 2004 and 5.3 percent in 2005. Following the inauguration of the new Government, GDP growth jumped to 7.8 percent in 2006, and accelerated to 9.5 percent in 2007.

Table 4.1:

Growth in Value Added by Sector in Liberia, 2004–2007

(percent)

Source: Government of Liberia and IMF staff estimates

Table 4.1:

Growth in Value Added by Sector in Liberia, 2004–2007

(percent)

		2004	2005	2006	2007
		Est.	Est.	Est.	Est.
Real GDP		2.6	5.3	7.8	9.5
Agriculture & fisheries		7.5	6.0	4.4	7.3
	Rubber	82.7	24.6	–25.0	26.0
	Coffee	1.0	2.0	2.0	2.0
	Cocoa	274.5	–47.7	5.0	5.0
	Rice	1.0	–10.0	15.0	10.0
	Cassava	1.0	19.0	24.0	10.0
	Other	–8.3	–1.3	5.3	–5.0
Forestry		–40.3	–6.2	2.9	1.0
	Logs & timber	–95.0	–100.0	0.0	0.0
	Charcoal & wood	–8.3	–3.2	2.9	1.0
Mining & panning		49.5	–15.0	0.0	1,614.6
	Iron ore	0.0	0.0	0.0	0.0
	Diamonds	0.0	0.0	0.0	186,156.6
	Other	49.5	–15.0	0.0	1,350.0
Manufacturing		97.7	8.2	16.0	3.9
	Cement	189.4	34.0	–8.0	0.0
	Beverages & beer	94.8	0.3	27.7	5.0
	Other	1.0	2.0	5.0	5.0
Services		19.2	9.9	12.0	10.4
	Electricity & water	1.0	2.0	20.0	15.0
	Construction	5.0	6.0	25.0	15.0
	Trade, hotels, etc	3.0	5.0	20.0	15.0
	Transportation & communication	5.0	2.0	7.0	7.0
	Financial institutions	2.0	2.0	7.0	10.0
	Government services	132.6	32.5	10.0	10.0
	Other services	4.0	2.0	10.0	7.0

Source: Government of Liberia and IMF staff estimates

View Table

Table 4.1:

Growth in Value Added by Sector in Liberia, 2004–2007

(percent)

		2004	2005	2006	2007
		Est.	Est.	Est.	Est.
Real GDP		2.6	5.3	7.8	9.5
Agriculture & fisheries		7.5	6.0	4.4	7.3
	Rubber	82.7	24.6	–25.0	26.0
	Coffee	1.0	2.0	2.0	2.0
	Cocoa	274.5	–47.7	5.0	5.0
	Rice	1.0	–10.0	15.0	10.0
	Cassava	1.0	19.0	24.0	10.0
	Other	–8.3	–1.3	5.3	–5.0
Forestry		–40.3	–6.2	2.9	1.0
	Logs & timber	–95.0	–100.0	0.0	0.0
	Charcoal & wood	–8.3	–3.2	2.9	1.0
Mining & panning		49.5	–15.0	0.0	1,614.6
	Iron ore	0.0	0.0	0.0	0.0
	Diamonds	0.0	0.0	0.0	186,156.6
	Other	49.5	–15.0	0.0	1,350.0
Manufacturing		97.7	8.2	16.0	3.9
	Cement	189.4	34.0	–8.0	0.0
	Beverages & beer	94.8	0.3	27.7	5.0
	Other	1.0	2.0	5.0	5.0
Services		19.2	9.9	12.0	10.4
	Electricity & water	1.0	2.0	20.0	15.0
	Construction	5.0	6.0	25.0	15.0
	Trade, hotels, etc	3.0	5.0	20.0	15.0
	Transportation & communication	5.0	2.0	7.0	7.0
	Financial institutions	2.0	2.0	7.0	10.0
	Government services	132.6	32.5	10.0	10.0
	Other services	4.0	2.0	10.0	7.0

Source: Government of Liberia and IMF staff estimates

19. Agricultural production has been increasing, particularly the production of rice and cassava. Rice production has expanded by 25 percent in two years, and cassava production has grown 35 percent. Rubber production (which accounted for 10 percent of GDP in 2005) declined in 2006, which significantly slowed the overall GDP growth rate, but it recovered in 2007, with rubber exports up significantly.

20. Construction has been a key driver of growth over the last two years, expanding by a cumulative 40 percent in 2006 and 2007. Construction activity is likely to continue to grow in the near future as buildings, roads, and other infrastructure are repaired and rebuilt. In addition, retail trade, hotels, restaurants, communications, transport, and some limited financial services are already expanding quickly and are likely to continue increasing as donor funds are disbursed, remittances from abroad grow, and related activities expand. Manufacturing of beer and beverages also added to the initial spurt of growth.

21. Importantly, the rapid acceleration of growth has been achieved without any expansion of forestry or mining. As significant new investments come on line in these activities, Liberia is poised for even more rapid growth during the PRS period. These opportunities are described in more detail in Chapter Seven.

22. Liberia faces many challenges in generating rapid, inclusive and sustainable growth, and success is far from guaranteed. But with the right policy framework as laid out in the second half of this PRS and the strong commitment of the Government, the Liberian people and Liberia’s partners, the country has great potential to achieve these goals.

5.1 Introduction

1. Liberia’s PRS is built on the foundation of the Government’s 150–Day Action Plan and its iPRS. The PRS is part of a longer–term continuum of the Government’s strategy for rapid, inclusive and sustainable growth and poverty reduction, including progress toward achieving the MDGs. The PRS covers the three–year period from April 2008 to June 2011, coinciding with the end of the 2010/2011 fiscal year. Since Liberia cannot achieve all of its long–term development goals during the three–year period of the PRS, the Government is planning on developing a follow–on PRS beginning in 2011. Thus, the PRS represents the next stage in a systematic and strategic approach for development management and for longer–term poverty reduction, transformation, and development.

2. Prior to the iPRS and PRS processes, no previous Government had formally and systematically consulted with the Liberian people to elicit their views on issues of national development. Liberian communities therefore had no way to fully voice their concerns, aspirations, and priorities. The war generated deep cynicism about government, and most of the population disengaged from the predatory and violent regimes they had come to associate with it.

3. To gain a deep understanding of people’s concerns and priorities, and to build national consensus on a shared vision of national development, the Government designed a PRS process that was more participatory and consultative than any other in the country’s history. In particular, the Government adopted an inclusive institutional mechanism and PRS group structure, and solicited and incorporated individual contributions from ministries and agencies, the Legislature, the Judiciary, donors, civil society, the private sector and the population more generally. Overall, the PRS is better informed, more targeted and more likely to be effectively implemented because of the consultative and participatory processes on which it was built.

5.2 Institutional Mechanism and PRS Group Structure

4. The PRS process adopted an inclusive governance structure, consisting of seven main hierarchical but interactive components (see Figure 5.1). The Cabinet sits at the apex of the structure and is responsible for the final endorsement and ongoing ownership of the PRS on the part of the Government.

The PRS Coordination Structure

Citation: IMF Staff Country Reports 2008, 219; 10.5089/9781451822984.002.A001

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The PRS Coordination Structure

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The PRS Coordination Structure

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5. Immediately below the Cabinet sits the Liberia Reconstruction and Development Committee (LRDC). The LRDC is the main Government–partner forum that coordinates Liberia’s national reconstruction agenda (Figure 5.2). The LRDC Steering Committee is chaired by the President and consists of the Ministers of Defense, Finance, Planning and Economic Affairs, and Public Works, as well as major partners including the United Nations, the United States, China, the World Bank Group, the European Commission, the IMF, the African Union and ECOWAS, and is supported by a small Secretariat. The Steering Committee is designed to make broad policy decisions in relation to the national reconstruction and development agenda, and to ensure coordination across key ministries and between the Government and its partners.

Liberia Reconstruction and Development Committee (LRDC)

Citation: IMF Staff Country Reports 2008, 219; 10.5089/9781451822984.002.A001

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Liberia Reconstruction and Development Committee (LRDC)

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Liberia Reconstruction and Development Committee (LRDC)

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6. The more detailed work of the LRDC is carried out on a regular basis in four Pillars that are chaired by the four Ministers in the Steering Committee and that are responsible for the substantive work in each of the four key areas of the national development framework: consolidating peace and security, revitalizing the economy, strengthening governance and the rule of law, and rehabilitating infrastructure and delivering basic services. The Pillars consist of representatives of the relevant Government ministries and agencies alongside donors and UN agencies.

7. The Steering Committee of the LRDC and the Cabinet provided overall policy guidance to the PRS process, ensured the necessary political support in preparation and drafting, and will be responsible for PRS coordination and oversight during the implementation period.

8. The PRS preparation process was led by the Minister of Finance, who established a PRS Core Team to assure the quality, policy coherence and strategic coordination of and consultation for the PRS process. The Core Team included the Minister of Planning and Economic Affairs, the Minister of Public Works, the Minister of Defense, the Director General of the Liberian Institute of Statistics and GeoInformation Services (LISGIS), and the National Coordinator of the LRDC Secretariat. The chairs of the six cross–cutting working groups created as part of the preparation process (see below) also participated in the Core Team.

9. The Core Team received advice and substantive input from the Stakeholders Consultative Committee (SCC), which consisted of a broad group of PRS stakeholders, including representatives from working groups, civil society, the private sector, development partners, officials from the counties, the Legislature and the Judiciary. A Technical Support Team provided technical and logistical support to the PRS process as a whole.

10. A wide range of working groups carried out the analyses and dialogue that underpin the PRS, as shown in Figure 5.3. Most groups worked on sector–specific strategies under one of the four key Pillars, while others addressed critical cross–cutting issues (such as children and youth, environment, gender equity, HIV and AIDS, monitoring and evaluation, and peacebuilding). The working groups developed much of the Pillar–specific policy, whereas the cross–cutting working groups provided analysis and inputs in relation to issues relevant to several Pillars. All of these working groups included participation from a broad group of stakeholders, including members of the Legislature, civil society, the private sector, and the general public, and were operated in a manner that emphasized open and participatory dialogue.

Organizational and Management Structure of Pillars and Working Groups

Citation: IMF Staff Country Reports 2008, 219; 10.5089/9781451822984.002.A001

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Organizational and Management Structure of Pillars and Working Groups

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Organizational and Management Structure of Pillars and Working Groups

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5.3 The Four Pillars

11. The four Pillars of Liberia’s PRS represent the core strategic areas at the foundation of generating inclusive and sustainable growth and addressing the poverty challenge in all its dimensions (see Figures 5.3 and 5.4). The four Pillars represent an organizing framework to establish key priorities, allocate scarce resources across competing demands, and achieve Liberia’s most important development goals.

The Four Pillars as a Strategic Framework

Citation: IMF Staff Country Reports 2008, 219; 10.5089/9781451822984.002.A001

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The Four Pillars as a Strategic Framework

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The Four Pillars as a Strategic Framework

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12. The four Pillars are mutually reinforcing. Progress in one area facilitates progress in the others. Peace and security are pre–requisites for sustained economic progress and a reduction of poverty. Without peace, economic growth and poverty reduction cannot proceed. Likewise, peace and national security will be severely threatened if chronic poverty continues to rise. Sustainable peace will largely depend upon the ability to create inclusive economic opportunities and deliver basic social services throughout the country. Similarly, basic infrastructure is required for broad–based growth and delivery of services nationwide, and provides the basis for decentralized governance systems. Governance and the rule of law provide the institutional base for strong economic performance and poverty alleviation, and the justice that is needed to ensure that grievances are settled through dialogue within the political system, as opposed to violence.

13. As the linkages in Figure 5.4 show, success in addressing issues within the four Pillars is expected to facilitate job creation and improved service delivery. The Pillars form the essential building blocks for realizing the vision of rapid, inclusive and sustainable economic growth and poverty reduction, and progress toward achieving the MDGs.

5.4 A Participatory and Consultative Process

14. The structure and mechanisms described above facilitated a participatory and consultative process that was comprehensive and inclusive. The participation and consultation occurred at many levels.

6.1 Introduction

1. Security in Liberia has been a major concern since independence. Security forces have been used to intimidate and at times terrorize the population and intervene in the political process without respect for due process of law. The security forces contributed to a system in which economic benefits and political power accrued to the elite, leaving the majority of Liberians in insecurity and poverty. The civil conflict compounded these problems, as security forces became major contributors to violence, destruction, and denial of justice.

2. When the current Government assumed office, it was confronted with a combination of more than a century of defective security sector governance, the legacy of a decade and a half of civil war, the lack of good governance, poor economic and natural resources management, the instability of the immediate sub–region, and the lack of strategies to address these situations. Key problems included a lack of professionalism, absence of control by democratically elected officials, absence of accountability to the rule of law, weak oversight, and inadequate resources. At the regional level, intra–state conflicts have been a major problem in West Africa and the Mano River Union sub–region for more than a decade. Liberia was the epicenter of that conflict.

3. Although the security situation has improved dramatically in the last few years, there is still a long way to go. The police force, the armed forces, and all other security forces need to be completely rebuilt. The process of broad security sector reform is off to a strong start, but must be completed as UNMIL begins to gradually draw down its peacekeepers over the next few years.

4. This is therefore the immediate focus of the National Security Sector Strategy for the Republic of Liberia (NSSRL) and its attendant Implementation Matrix (NSSRL–IM), which are inextricably linked with the PRS process. Like the PRS, the NSSRL was developed using a consultative process to ensure local ownership of the strategy and reflects the interrelationships between security, poverty, justice and peace. The past has shown how the vicious cycle of poverty, marginalization and inequity can drive conflict and further poverty. Accordingly, the Government’s approach to addressing key sources of conflict, including poverty, will take into account the multidimensional nature of peace and security.

5. During the PRS county consultation process, many people pointed to crime – particularly rape, theft, and drug abuse – and lack of faith in the security agencies as important challenges. These issues continue to be key security and rule of law concerns and highlight the close connection between the Governance and Rule of Law Pillars, and their institutional frameworks. Gender based violence (GBV) was used as weapon of war during the two–decade period of unrest. It remains widespread in Liberia, and was another significant security concern highlighted during county consultations.

6. The situation of Liberian youth was another major concern expressed at the county level; the prevailing increasing the risk of a return to violence. Coupled with the breakdown of traditional values and norms as a result of the war, the situation of youth is a potentially volatile security challenge.

7. Another major challenge is completing the process of reintegrating both refugees and internally displaced persons (IDPs) and ensuring that displaced persons are back in their communities with sustainable livelihoods. The conflict displaced an estimated 500,000 persons throughout the country, of which eighty percent constituted women and children.³⁶ During the immediate post–conflict period, more than 300,000 registered IDPs resided in 35 recognized IDP camps, predominantly in the suburbs of Monrovia. Between November 2004 and April 2007, an inter–agency operation assisted 326,990 IDPs to return and resettle in their counties of origin or preference, thereby enabling the complete closure of all 35 recognized displacement camps. With respect to refugees, of a total of 233,364 registered camp–based Liberian refugees in neighboring asylum countries, 157,467 have been voluntarily repatriated and reintegrated in their various counties of origin or preferred areas of return. Another 75,797 registered Liberian refugees currently remain in countries across West Africa, although approximately 40,000 are expected to begin returning from Ghana in September 2008.

6.2 Major Goals and Objectives

8. The central goal for the security sector is to create a secure and peaceful environment, both domestically and in the sub–region, that is conducive to sustainable, inclusive, and equitable growth and development.

9. In pursuit of this goal, the Government will focus on achieving three key objectives:

• Build and maintain effective national security institutions based in law and subject to civilian authority that are capable of defending Liberia and its inhabitants. As the UNMIL peacekeeping force draws down, the Government must build capable and professional security forces. Consistent with the NSSRL, the Government will restructure and refocus all security institutions and correctly train personnel in line with acceptable international standards, including promotion of gender equity and justice, accountability, ethical behavior, and professional conduct under full democratic civilian control. It will deploy security forces throughout the country to meet the security needs of the entire population. It will recruit new personnel via transparent and equitable vetting processes that reflect Liberia’s diverse ethnic, gender and religious representation, with qualified personnel selected and promoted on merit, and receiving appropriate pay. The Government will aim for at least 20 percent of the security forces to be women, and for women to be represented appropriately at all levels of authority. It will ensure that all training curricula fully incorporate gender considerations and issues, and place special emphasis on protection of women and children.

• Build public confidence in the abilities of the security forces to maintain peace and security, comply with and enforce International Human Rights Laws and other norms, and protect against domestic and transnational crimes. The security forces must consolidate the transition from war to peace through pursuit of democracy, good governance and human security. They will also act impartially to safeguard people from violence and crime, allow their participation in decision–making, protect their basic rights, and help build an environment conducive to economic opportunity for all Liberians. Incidents of corruption and police brutality will be reduced, and security forces will adopt community policing, problem solving and crime prevention methods that are sensitive to issues confronting marginalized groups, including women, youth, and persons with disabilities. Special emphasis will be placed on addressing issues of GBV (See box below.).

• Promote domestic and sub–regional peace and security through close cooperation, coordination and adoption of best practices. Liberian security forces are aiming to adopt systems and practices that are consistent with other ECOWAS and MRU sub–region countries so as to facilitate regional and sub–regional cooperation and improve Liberia’s security and stability. Such cooperation has direct potential effects on poverty as it represents a precondition for economic cooperation.

10. To achieve these objectives, the Government will pursue policies and programs in three areas: Restructuring and reforming security institutions, strengthening human and personal security, and building and maintaining regional peace and security.

6.3 Restructuring and Reforming Security Institutions

11. Restructuring and reforming security institutions are central to Liberia’s national security. In the past, national security institutions were characterized by a lack of professionalism and accountability, gross abuse of human rights, adoption of unconventional practices in security functions, hiring untrained individuals to render national security services, and poor security management. Presently the general population enjoys security protection that is largely dependent upon UNMIL resources and expertise. To build a strong new Liberian security architecture force, the Government and its partners are developing a sector–wide security implementation plan to bring Liberian led and owned coordination and cohesion to developmental efforts. This includes conducting training and building capacity in all of the key Liberian national security institutions based on internationally recognized and acceptable curricula with gender sensitive modules. Specifically the Government and its partners are training:

• 2,000 soldiers for the Armed Forces of Liberia (AFL);

• 3,500 National Police officers;

• 500 Emergency Response Unit (ERU) officers for the LNP as a specialized armed anti–crime unit;

• 91 civilian staff for the Ministry of National Defense;

• 2,000 Bureau of Immigration and Naturalization officers;

• 200 National Security Agency (NSA) officers; and

• a significant number of officers for the Special Security Service (SSS) and the Liberia National Fire Service (LNFS).

12. The transformed institutions will be fully subjected to civilian management and oversight, especially legislative oversight. This is essential because of the prolonged years of war and mismanagement, which factionalized the sector and undermined its image and the public confidence. The Government will work to create civilian oversight mechanisms to ensure that law enforcement and security agencies adhere to high ethical standards and professional conduct. It will establish a complaint procedure to enable proper and independent pursuit of complaints about unlawful activities by security personnel.

13. The roles of the various security institutions during the PRS period and various institutional reforms are set out in full detail in the NSSRL–IM and are summarized as follows: The National Security Council (NSC), chaired by the President and comprising all the Ministers of Government, will continue to be the highest security coordinating body in the country with sole responsibility for national security policy issues. The Government will develop a county– and district–based security mechanism which will report to the NSC, enabling effective and accountable security coordination between the Government and local government, civil society, and traditional leaders. This mechanism will facilitate the consideration of people’s security concerns at the appropriate level and the passing on of those concerns to the Government for further action where appropriate. This mechanism will also assist with cross–border security coordination with sub–regional neighbors.

14. The Government aims to build an efficient process for the assessment and rapid dissemination of accurate intelligence in order to properly support senior decision–makers. The goal is to build a mechanism to provide multi–agency intelligence assessments that are coordinated and objective. This will enable the strategic management and exchange of intelligence among agencies to keep the Government abreast of developing national security threats. Periodic security threat reviews shall be conducted to help in preparing appropriate security responses. In addition, the National Security Agency (NSA) will continue to serve as Liberia’s lead agency for national intelligence and counter–intelligence, as well as the focal point for intelligence–gathering and provision of counter–intelligence for the Office of the President. Over the PRS period, NSA and other intelligence–gathering bodies shall be further developed to better respond to changing domestic, regional, and global threats according to a system of National Intelligence Requirements (NIRs).

15. In order to rationalize and reform the structure of the security apparatus, the Government will seek to repeal the laws that created the National Bureau of Investigation (NBI) and the Drug Enforcement Agency (DEA) and transfer some of their related duties, responsibilities and operations to the LNP. It will also propose the repeal of the statute that created the Ministry of National Security (MNS) and merge the operational functions and re–vetted personnel of the MNS with the NSA. This will eliminate excessive duplication and overlapping of functions, reduce bureaucracy, and increase law enforcement efficiency and accountability.

16. The LNP will be the primary operational agency responsible for internal security, and will be restructured to ensure greater effectiveness and efficiency. In particular, the LNP will reassess its recruitment and vetting practices, before being expanded to address shortages of personnel across the country. They will be better trained to address personal crime, to reduce incidents of corruption and police harassment, and to strengthen the confidence of the local communities in the police, as discussed below. The LNP will also receive a new specialist–trained armed branch to be called the Emergency Response Unit (ERU) to deal with situations requiring the controlled use of arms. The new AFL will be trained for the unusual event that they are needed to support the civil administration, in which case they would be subject to civilian control. However, any deployment of the military in support of the civil administration will be regulated by clear and legally accepted principles to ensure clear lines of command and control.

17. The AFL will be restructured to make it a viable and sustainable force that can defend the territorial integrity of Liberia against external aggression and assist in response to natural disasters. A separate Defense Policy will be prepared to address the duties and functions of the Armed Forces of Liberia in greater detail.

18. The Government will establish a professional mentor relationship in the new Officers Corps for the AFL, with properly vetted and trained officers capable of leading an armed force in a democratic postconflict environment. This mentoring arrangement will be designed to reverse the deep–seated public mistrust of the Liberian military. To implement this program, the Government will seek well–trained personnel with good human rights records to lead the new AFL during this democratic post–conflict era, including personnel from the dissolved AFL and possibly from other military forces in the region. The Government will also work with neighboring countries to establish mentoring relationships between senior members of the security forces.

19. The Liberia Coast Guard (LCG) will be revitalized to ensure the security of Liberia’s maritime borders and natural resources therein. This will represent another significant security sector contribution to reducing poverty–assisting revenue generation and protection for the Liberian economy. Such revitalization will include training of the LCG to tackle smuggling and to conduct Search and Rescue (SAR) activities, while working within an integrated regional maritime security network.

20. Liberia’s land borders and entry points need to be adequately protected to prevent illegal entrants, trafficking of narcotic substances, child trafficking, and other illegal activities. Development and restructuring of the Bureau of Immigration and Naturalization (BIN) will be a key element of government strategy to address these concerns. All the restructuring plans for the development of the security services including those of the Bureau of Corrections, Liberia National Fire Service (LNFS), Special Security Service (SSS) and the Customs and Excise Service will be expressed in full detail in the NSSRL–IM as referred to in the PRS Security Pillar matrix at the end of this chapter.

21. In restructuring and reorganizing its national security institutions, the Government will address the structural discrimination that occurs in incentive systems, operational structures, and bureaucratic procedures against women, persons with HIV and AIDS, persons with disabilities and others. Discrimination has a negative impact on the morale and performance of new recruits, undermines delivery and quality of services, and affirms destructive attitudes and practices such as GBV. Institutional reform will ensure the adoption of justice and equality as core values and allow for equal access and protection both within the security sector agencies and for the citizens that they exist to serve. Toward this end, all agencies in the sector will adopt a Code of Conduct covering issues such as discrimination and domestic violence, a Sexual Harassment Policy, and other related personnel policies, and they will take steps to ensure that appropriate mechanisms are established to handle violations of these policies. The security agencies will develop HIV and AIDS policies, including providing information on prevention, counseling, and treatment options. To ensure that gender concerns are incorporated to build an inclusive working environment, each agency will include a gender–sensitive syllabus into training curricula and a Gender Advisor will be appointed in each agency to identify opportunities for capacity building of female personnel. Disability–sensitive modules will also be included in the training curricula for all security institutions to improve skills and service delivery to persons with disabilities.

6.4 Strengthening Human and Personal Security

22. The Government is responsible for protecting the citizens of Liberia from threats or physical violence that endanger their basic survival, be it from within the country or from other countries, or from violent individuals or groups. Focusing on human security requires that the Government take a broad view of security that recognizes the importance of human rights, good governance and access to economic opportunity, education and health care.

23. Though the threat of an armed conflict has reduced, increases in armed robbery and related secondary crimes (particularly rape) and vigilantism are significant threats to individual and community security. This problem is linked to high unemployment among ex–combatants and ex–servicemen. The PRS consultative process revealed substantial public concern about personal crime at the county level. There is also a strong link between crime, unemployment, lack of investor confidence and insecurity.

24. The police and other security agencies will be trained to cooperate closely in a structured system of national, county and district–level security committees, which also involve local government, is important in gaining the confidence of local communities to combat crime and underpin the rule of law and is a key ongoing part of the Government’s efforts to improve human and economic security. In particular, the LNP will formulate prevention programs to combat crimes, especially armed robbery. It will conduct community crime sensitization campaigns regularly to educate communities about basic measures of preventing armed robbery, as well as specialized programs to involve women in crime prevention and to support to victims of crime. The LNP will increase its presence at night via foot and mobile patrols at the community level, and will expand its presence across the country as staff size allows. It will also develop strategies and training programs to respond quickly to cases of local unrest, land conflict, or ethnic clashes. Given that the history of police–citizen relationships is one characterized by fear and mistrust, a new emphasis on involving local communities and adoption of more citizen–friendly policing methods will improve policecitizen relationships. The LNP and other security agencies will formulate policies to reduce the incidence of corruption, police brutality, and other ethical violations.

25. Specific measures will be put in place to strengthen the security sector agencies, in particular LNP, to implement the National Plan of Action against Gender Based Violence. In addition to gender–sensitive training for all personnel, emphasis will be placed on strengthening the Women and Children Protection Division in LNP and its units at the county level. The LNP and the judicial services will train staff in appropriately handling cases of sexual exploitation and abuse, and also develop clear guidelines for referral and case management for GBV cases. Training will also be undertaken to raise awareness of the rights and special needs of persons with disabilities. National and community–based mechanisms to prevent violence, abuse and exploitation of children and youth will also be developed.

26. Drug trafficking is an emerging threat in West Africa, including Liberia. Two recent and significant drugs seizures off the West African coast confirm that Liberia, like some of its West African neighbors, may be targeted as a transit point for shipping heroin and cocaine to the US and Europe. Marijuana is also cultivated domestically. The high level of young unemployed is a potential source of cheap drug runners, and the lack of a functioning coastguard and perceived weak airport, port and land border security make Liberia attractive to drug traffickers. Drugs are inextricably linked with other domestic crimes, posing threats to rural communities and development activities. As part of security restructuring, Government will merge the Drugs Enforcement Agency (DEA) with the LNP and strengthen its counternarcotics capability via provision of standardized training, logistics, and modern equipment. The Bureau of Immigration and Naturalization (BIN), the Coast Guard, Airport Security and other security agencies will buttress the LNP’s efforts in combating the traffic in illegal drugs through the provision of improved intelligence cooperation and greater vigilance and collaboration at airport, seaport, and land borders. Overcrowded prisons and a weak bail system also pose security threats. Those least able to pay bail are often the ones remanded in custody (in many cases for minor offences), thereby overfilling the Monrovia Central Prison. Serious criminals such as drug dealers, who pose a greater threat to the community, can afford to pay bail and avoid prison custody. The apprehended criminals reappear on bail to intimidate both LNP officers and witnesses. This seriously deters LNP’s efforts to remove hard core criminals from the streets and improve security. The Government therefore intends to renovate existing correction facilities/structures and construct additional facilities to address prison overcrowding. The Government will seek to amend the Penal Law of Liberia to ensure that serious criminal offenses become non–bailable offenses. As discussed in Chapter Eight, the juvenile justice system will be reformed and its capacity built to adequately protect the rights of minors in line with the “parens patriae” philosophy. Government will ensure that the skills of juvenile officers of the LNP are improved in line with professional standards.

27. Fires resulting in death and destruction of property are an all–too–often occurrence. Most houses lack electricity and the widespread use of candles and coal pots increases the risk of fire. In addition, the fire service is inadequately equipped. Inability to provide fire protection damages the confidence of the people and investors. The Government is keen to ensure that the National Fire Service of Liberia (NFS) is provided with the needed logistics and contemporary firefighting equipment, and to train fire fighters to effectively provide the necessary fire prevention education and protection. The Government will therefore conduct periodic national fire prevention sensitization campaigns to educate the population. Training exercises will be conducted for personnel of the NFS using a curriculum that conforms to international standards. There will also be regular refresher training for fire fighters to upgrade their skills in contemporary techniques.

28. A range of issues related to land and property ownership continue to pose security threats. Communal land and boundary disputes between ethnic and clan groups have historically been a source of interethnic conflicts. Land appropriation and tenure arrangements work to the disadvantage of historically marginalized groups, creating resentment, Concessions awarded to foreign firms in the past have often ignored the rights of local communities. Local communities’ claims to forest resources and illegal occupation of private land holdings also threaten to spark violent conflicts and over–burden already weak local and national conflict resolution mechanisms. The next chapter discusses the specific steps that the Government plans to take in this area, including reviewing some concession agreements, and establishing a Land Commission.

29. Liberia’s recent history shows the potential threat posed by ethnic hatred and tension. The war exacerbated hatred, tension and mistrust, and ethnicity can be easily politicized. The Government will seek to address these issues to maintain the peace. In particular, the Government will conduct a tribal/ethnic conflict diagnostic assessment to determine specific ethnic tension concentrations. The assessment will inform the tribal/ethnic reconciliation program formulation process.

30. To promote respect for and protection of human rights, soldiers and officers of security and law enforcement agencies will be legally responsible for ensuring that human rights are not abused and that no act of human rights abuse will go with impunity. Human rights violators will be arrested, charged appropriately, and tried in a court of competent jurisdiction in line with Liberian law. The curricula of the AFL and other security institutions will strongly emphasize human rights education to prepare them for effective enforcement of human rights, including issues related to gender based violence. Soldiers caught violating human rights will be sent to the Court Martial Board to ensure justice in accordance with the Uniform Code of Military Justice (UCMJ). Other security officers who violate human rights will be subject to the due process of law to ensure respect for and protection of human rights.

31. The process of retiring ex–servicemen and re–integrating ex–combatants has gone well, but some still pose a lingering security threat. About 17,000 ex–servicemen have been retired from the army, police, SSS and other agencies. Although the Government has made the required severance payments, some continue to demand more benefits. The Government’s Disarmament, Demobilization, Reintegration and Rehabilitation (DDRR) program, completed in 2004, demobilized 103,019 ex–combatants. However, there are believed to be 9,000 ex–fighters who remained outside the Rehabilitation and Reintegration program. Some reportedly went to the Ivory Coast and are still at large. Some have fought in Guinea and Sierra Leone and represent a continuing national and regional security threat. Separately, there are others who are only now claiming to be ex–combatants and who were never registered as such under the DDRR process.

32. Both ex–servicemen and ex–combatants constitute national and local threats where they feel marginalized and excluded. As restructuring of the security sector continues in line with the NSSRL, further retirement of excess staff will also be required. The Government is considering a series of measures to ensure that their concerns are addressed and to facilitate their proper reintegration into society. The establishment of the Veterans’ Bureau is one such effort, providing education and employment programs. The lifespan of the National Commission on Disarmament, Demobilization, Rehabilitation and Reintegration (NCDDRR) has also been extended to address specific issues associated with the rehabilitation and reintegration of the ex–combatants, though support for the NCDDRR will end during 2008. In addition, the Government’s economic strategy and capacity building initiatives (discussed in Chapters Seven and Twelve, respectively) aim to generate employment opportunities that will help diffuse the threats that stem from household economic insecurity.

33. While the sudden, unanticipated return of approximately 40,000 Liberian refugees from Ghana presents a significant challenge, the Government intends to conclude the process of refugee repatriation and reintegration during the PRS period. As part of this program, tripartite conferences will be held between UNHCR, the Government of Liberia and the governments of countries where Liberians have sought refuge, to develop durable solutions. The Government will also ensure that basic social services are available through community empowerment and assistance programs, including services relating to income generation, education, agriculture and temporary shelter.

34. In all of its security agencies, the Government will build systems for accountability and governance to assure that security personnel adhere to high standards of professional conduct and ethical behavior. Leaders of the security agencies will work closely with political leaders and civil society to increase the level of public monitoring. They will work with local leaders to create county– and district–level committees, coordinated with local government and other community leaders, to provide a forum through which security issues can be addressed locally.

6.5 Building and Maintaining Regional Peace and Security

35. Over the last fifteen years, the Mano River basin has been an unstable sub–region. Liberia was at the epicenter of this instability, as the Liberian civil war extended to neighboring Sierra Leone. Guinea and Cote d'Ivoire have also suffered instability. Against this regional backdrop, Liberia is attempting to reform and to address wider sub–regional issues as part of its national security policy, since fragility of immediate neighboring states poses a potentially significant problem. In the absence of regional stability, trade between neighboring countries breaks down, with the result that national economies stagnate and poverty is not reduced. The Government will work to cement the growing bilateral and multilateral security cooperation between member states of the Mano River Union (MRU), ECOWAS, and the African Union, to meet the many transnational organized crime and security threats that require international collaboration.

36. The AFL will, in due course, participate fully in international peace and security arrangements including the ECOWAS Standby Force (ESF), African Union Standby Force (ASF), UN Peacekeeping, and others, so as to advance their professionalism. This will be done bearing in mind the uncompromised statutory responsibility to safeguard the integrity, sovereignty and political independence of Liberia’s territory and resources.

37. Finally, the Government will seek the support of countries within ECOWAS and the African Union, as well as UNMIL and other international partners, to assist the LNP in becoming a functioning part of the greater sub–regional security, intelligence and law enforcement effort.

PRS Priority Action Matrix – Peace and Security

PRS Priority Action Matrix – Peace and Security

Issue	Priority Interventions	Delivery Date	Lead Ministry / Agency
Goal: To create a secure and peaceful environment, both domestically and in the sub–region, that is conducive to sustainable, inclusive, and equitable growth and development.
Strategic objective 1: To provide strategic and statutory guidance for security institutions
The sector suffers from overlapping and duplication of security functions among security institutions, lack of accountability, and defective management of the security sector.	Formulation and Implementation of NSSRL–IM consistent with the PRS Cycle and annual validation exercises with associated costings	April 2008–April 2010	MoJ, LNP, BIN, NFS, Corrections, NSA, SSS, MoD AFL, ONSA
	Streamline security institutions to curb proliferation of agencies	April–December 2008	MoJ, MoD, NSC
	Repeal and amend statutory provisions of streamlined security agencies and that of host agencies in line with the NSSRL and National Security Architecture	December 2008	MoJ, MoD, NSC
	Formulate Standard Operating Procedures for the new architecture	December 2008	Security Institutions
	Execute and monitor the Concept of Operation (Con–Ops) of national security agencies, including national security exercises	December 2010	MoD, MoJ, Security Institutions
	Review NSSRL and NSSRL–IM in line with end of the three–year PRS period	December 2010	Security Pillar
	Include gender sensitive, disabilities sensitive, and environment sensitive modules in curricula of security institutions	December 2008	MoD, MoJ, MoGD,
Strategic objective 2: To build the capacity of security institutions
Training is still needed for some security institutions, and security institutions lack logistics, equipment and adequate remuneration for operation.	Reassess the ongoing vetting process and other practices relating to, the recruitment, training, and deployment of LNP personnel, including consideration of establishing merit–based standards, entry requirements, accountable procedures for promotion and assignment, a Civilian Oversight Board and mentorship programs	April–December 2008	MOJ, LNP
	Establish the National Coast Guard pending enactment of the Defense Act	July 2008	MoD
	Complete initial force development, including mentoring programs, of the Armed Forces of Liberia	December 2010	MoD
	Prepare curriculum and training modules, train officers and fire fighters of the National Fire Service (NFS)	December 2009	NFS
	Train the Emergency Response Unit (ERU) of the LNP	December 2009	LNP
	Deactivate, vet and recruit, and train officers of the Bureau of Immigration and Naturalization (BIN)	December 2010	BIN
	Recruit and train officers of the National Security Agency (NSA)	December 2009	NSA
	Conduct an operational needs assessment of security institutions	June 2008	AFL, LNP, BIN, NSA, NFS, SSS
	Prepare a medium–term budget for each national security institution to meet operational needs	December 2008	BoB, MoF, MoD MoJ, Security Institutions
Strategic objective 3: To provide ulation of Liberia adequate territorial protection and law enforcement services to the general population of Liberia
Inadequate presence of security officers throughout Liberia, security institutions are not yet in full control of security responsibility.	Enhance Community–Oriented Policing to improve relations between civilians and security institutions	December 2008	MoJ, LNP
	Prepare comprehensive deployment plans for security institutions	December 2008	Security Institutions
	Execute deployment plans for security institutions	December 2010	Security Institutions
	Regular situational and scenario exercises in preparation for national security forces to take over security responsibilities from UNMIL	December 2010	Security Institutions
	Provide adequate human and personal security, especially for women and girls of school age and persons with disabilities, including ensuring more speedy prosecution of violations against human security	2008–2011	MoD, MoJ 1
Strategic objective 4: To ensure institutional participation in security governance and functions
Civilians and local authorities are excluded from participating in security governance. Female participation in security functions is inadequate.	Develop a county–based security mechanism to coordinate and promote local management of peace and security, including civilian and local government participation in security governance	December 2008	MoD, MoJ, MIA
	Reinforce the initiative to realize 20 percent women’s participation in the military and various security agencies	December 2010	MoGD, MoD, MoJ

View Table

PRS Priority Action Matrix – Peace and Security

Issue	Priority Interventions	Delivery Date	Lead Ministry / Agency
Goal: To create a secure and peaceful environment, both domestically and in the sub–region, that is conducive to sustainable, inclusive, and equitable growth and development.
Strategic objective 1: To provide strategic and statutory guidance for security institutions
The sector suffers from overlapping and duplication of security functions among security institutions, lack of accountability, and defective management of the security sector.	Formulation and Implementation of NSSRL–IM consistent with the PRS Cycle and annual validation exercises with associated costings	April 2008–April 2010	MoJ, LNP, BIN, NFS, Corrections, NSA, SSS, MoD AFL, ONSA
	Streamline security institutions to curb proliferation of agencies	April–December 2008	MoJ, MoD, NSC
	Repeal and amend statutory provisions of streamlined security agencies and that of host agencies in line with the NSSRL and National Security Architecture	December 2008	MoJ, MoD, NSC
	Formulate Standard Operating Procedures for the new architecture	December 2008	Security Institutions
	Execute and monitor the Concept of Operation (Con–Ops) of national security agencies, including national security exercises	December 2010	MoD, MoJ, Security Institutions
	Review NSSRL and NSSRL–IM in line with end of the three–year PRS period	December 2010	Security Pillar
	Include gender sensitive, disabilities sensitive, and environment sensitive modules in curricula of security institutions	December 2008	MoD, MoJ, MoGD,
Strategic objective 2: To build the capacity of security institutions
Training is still needed for some security institutions, and security institutions lack logistics, equipment and adequate remuneration for operation.	Reassess the ongoing vetting process and other practices relating to, the recruitment, training, and deployment of LNP personnel, including consideration of establishing merit–based standards, entry requirements, accountable procedures for promotion and assignment, a Civilian Oversight Board and mentorship programs	April–December 2008	MOJ, LNP
	Establish the National Coast Guard pending enactment of the Defense Act	July 2008	MoD
	Complete initial force development, including mentoring programs, of the Armed Forces of Liberia	December 2010	MoD
	Prepare curriculum and training modules, train officers and fire fighters of the National Fire Service (NFS)	December 2009	NFS
	Train the Emergency Response Unit (ERU) of the LNP	December 2009	LNP
	Deactivate, vet and recruit, and train officers of the Bureau of Immigration and Naturalization (BIN)	December 2010	BIN
	Recruit and train officers of the National Security Agency (NSA)	December 2009	NSA
	Conduct an operational needs assessment of security institutions	June 2008	AFL, LNP, BIN, NSA, NFS, SSS
	Prepare a medium–term budget for each national security institution to meet operational needs	December 2008	BoB, MoF, MoD MoJ, Security Institutions
Strategic objective 3: To provide ulation of Liberia adequate territorial protection and law enforcement services to the general population of Liberia
Inadequate presence of security officers throughout Liberia, security institutions are not yet in full control of security responsibility.	Enhance Community–Oriented Policing to improve relations between civilians and security institutions	December 2008	MoJ, LNP
	Prepare comprehensive deployment plans for security institutions	December 2008	Security Institutions
	Execute deployment plans for security institutions	December 2010	Security Institutions
	Regular situational and scenario exercises in preparation for national security forces to take over security responsibilities from UNMIL	December 2010	Security Institutions
	Provide adequate human and personal security, especially for women and girls of school age and persons with disabilities, including ensuring more speedy prosecution of violations against human security	2008–2011	MoD, MoJ 1
Strategic objective 4: To ensure institutional participation in security governance and functions
Civilians and local authorities are excluded from participating in security governance. Female participation in security functions is inadequate.	Develop a county–based security mechanism to coordinate and promote local management of peace and security, including civilian and local government participation in security governance	December 2008	MoD, MoJ, MIA
	Reinforce the initiative to realize 20 percent women’s participation in the military and various security agencies	December 2010	MoGD, MoD, MoJ

7.1 Introduction

1. Liberia’s central economic goal over the next three years is to firmly establish a stable and secure environment and to be on an irreversible path toward rapid, inclusive and sustainable growth and development. The achievement of this goal will have direct positive effects on the other three Pillars, as inclusive growth reduces internal security threats related to household insecurity, lessens the pressure on infrastructure and basic services, and facilitates the improvement of governance and the rule of law.

2. As explained in Chapter Four, the Government’s strategy for accelerating economic growth has three prongs: (1) rebuilding basic infrastructure, especially roads; (2) restoring production in the leading natural resource sectors, while ensuring the benefits are widely shared; and (3) reducing production costs to establish the foundation for diversification of the economy over time into competitive production of downstream products, and eventually manufactures and services. The first of these is described primarily in Chapter Nine; the latter two are discussed in this chapter.

3. According to government estimates produced in conjunction with the IMF, economic growth is expected to accelerate to 9.6 percent in 2008, 10.3 percent in 2009, and 14.8 percent in 2010, before tapering off to 12.3 percent in 2011.³⁷ Growth will be driven primarily by the reopening of the forestry and mining sectors, which nearly ceased production due to the war and UN sanctions, complemented by construction and other services. Growth is likely to decelerate after 2011 (although it will remain robust by historical standards) when the initial natural resource investments are more fully on stream. The projected growth rates are shown in Table 7.1.

Table 7.1:

Sectoral Real GDP Projections 2007–2011

Source: Government of Liberia and IMF staff estimates

Table 7.1:

Sectoral Real GDP Projections 2007–2011

		2007	2008	2009	2010	2011
		Est.	Proj.	Proj.	Proj.	Proj.
		Annual percentage change
Real GDP		9.5	9.6	10.3	14.8	12.3
Of which:
	Agriculture & fisheries	7.3	3.6	3.7	3.8	3.8
	Forestry	1.0	22.1	10.0	15.6	14.9
	Mining & panning	1614.6	73.5	106.4	78.2	51.1
	Manufacturing	3.9	3.9	3.9	24.3	5.0
	Services	10.4	9.5	9.0	8.2	8.2
		Percent share of total real GDP
Real GDP		100.0	100.0	100.0	100.0	100.0
Of which:
	Agriculture & fisheries	42.0	39.8	37.4	33.8	31.2
	Forestry	12.9	14.4	14.4	14.5	14.8
	Mining & panning	2.5	4.0	7.5	11.7	15.8
	Manufacturing	13.2	12.5	11.8	12.7	11.9
	Services	29.3	29.3	28.9	27.3	26.3

Source: Government of Liberia and IMF staff estimates

View Table

Table 7.1:

Sectoral Real GDP Projections 2007–2011

		2007	2008	2009	2010	2011
		Est.	Proj.	Proj.	Proj.	Proj.
		Annual percentage change
Real GDP		9.5	9.6	10.3	14.8	12.3
Of which:
	Agriculture & fisheries	7.3	3.6	3.7	3.8	3.8
	Forestry	1.0	22.1	10.0	15.6	14.9
	Mining & panning	1614.6	73.5	106.4	78.2	51.1
	Manufacturing	3.9	3.9	3.9	24.3	5.0
	Services	10.4	9.5	9.0	8.2	8.2
		Percent share of total real GDP
Real GDP		100.0	100.0	100.0	100.0	100.0
Of which:
	Agriculture & fisheries	42.0	39.8	37.4	33.8	31.2
	Forestry	12.9	14.4	14.4	14.5	14.8
	Mining & panning	2.5	4.0	7.5	11.7	15.8
	Manufacturing	13.2	12.5	11.8	12.7	11.9
	Services	29.3	29.3	28.9	27.3	26.3

Source: Government of Liberia and IMF staff estimates

4. For Liberia to achieve its key objectives, rapid growth alone is not enough – it must be widely shared throughout society. The Government is committed to generating much more inclusive economic opportunities for historically marginalized groups, including disenfranchised young men, people living in rural areas, women, and persons with disabilities.

5. The basis of this strategy will be private sector–driven growth, supported by public sector actions aimed at strengthening market functions. While attracting foreign investment is critical to growing the economy, the aim is ultimately to empower domestic entrepreneurs to conduct business and create jobs for others, thereby growing the size and purchasing power of the Liberian middle class. The Government will focus on what the private sector cannot or will not do at an appropriate price, such as maintaining safety and security, ensuring the rule of law, providing certain infrastructure and other public goods, and providing basic services for the poor. It will aim to introduce policies that facilitate the expansion and functioning of markets and to establish a regulatory environment that is conducive to long–term growth. More direct interventions will be infrequent, and where they do occur, they will be based on pressing need, and be time–bound with clear exit strategies and targeting mechanisms based on sound assessment of both potential market–retarding and market–promoting impacts. These assessments will take into account Liberia’s particular situation and its current transitioning from an emergency phase to a development phase.

7.2 Agriculture and Food Security

6. Agriculture provided the mainstay of the economy throughout the Liberian conflict and has accounted for over half of GDP in the postwar period (compared to one–tenth in the late 1970s). A large proportion of the economically active population of Liberia is engaged either directly or indirectly in smallholder subsistence agriculture or fisheries. Women and children are particularly dependent on the agricultural sector. Revitalizing the agricultural sector is crucial to overall economic recovery, ensuring that growth is inclusive, promoting peace and stability, and sustaining poverty reduction. Historically, agricultural performance has been limited by structural constraints, poor policies and armed conflict. As a result, in 2006 some 81 percent of the rural population was found to be either moderately vulnerable (41 percent) or highly vulnerable to food insecurity (40 percent), while 11 percent of the rural population was food insecure and only 9 percent was food secure. Chronic malnutrition rates had reached 39 percent for children under five.³⁸ Even cash and/or food crop producers were considered likely to be food insecure, suggesting that food production for auto–consumption still does not often enable many households to meet their food needs.³⁹

7. The key challenges for transformation of the agriculture sector are:

• increasing food crop yields by adopting new techniques and technologies;

• improving access to seeds, fertilizers, and other inputs, and strengthening linkages to output markets, primarily by rebuilding farm–to–market roads;

• restoring value chains and increasing community and MSME participation in supply and value chains;

• providing food assistance to vulnerable groups that are severely food insecure;

• strengthening key agricultural institutions that were destroyed during the conflict;

• slowing the extent of illegal fishing and increasing the value added from catches;

• slowing deforestation, slash–and–burn cultivation, and tree cutting for firewood and charcoal, which degrade habitats and deplete natural resources; and

• providing greater opportunities for women and youth in agriculture, especially in the formal sector.

8. Women are major players in the agricultural sector, where they constitute the majority of small–holder producers and the agricultural labor force in general. Women produce some 60 percent of agricultural products, carry out 80 percent of trading activities in rural areas, and play a vital role in linking rural and urban markets through their informal networks. Despite this deep involvement in agriculture, they represent a tiny fraction of participants in the formal sector. They also have less access to productive inputs than men, including land, skills training, basic tools and technology.

9. Despite its challenges, Liberian agriculture has tremendous potential. Developments in world markets have sharply raised the demand and international prices for agricultural commodities. Petroleum price increases have diverted large amounts of grain, sugar, and vegetable oils to ethanol and bio–fuel production. Environmental concerns over the use of fossil fuels have reinforced this shift. High and rising incomes in Asia and the Middle East have increased the demand for animal feed to support rising consumption of animal–based products. Additional pressure has emerged through the diversion of productive farm land, especially in Asia, to industrial and other uses. The consequence of these developments has been a sharp upward shift in the price of all agricultural commodities. Liberia, with its huge potential for producing palm oil, rubber, rice, cassava and other agricultural products, is ideally placed to take advantage of these opportunities, which offer the prospect of supporting the sustained expansion of farm–based employment and incomes. These benefits will spill over to other rural economic activities such as marketing, processing, and storage.

10. The central goal for the agricultural sector during the PRS period is to revitalize the sector in order to contribute to inclusive and sustainable economic development and growth, and to provide food security and nutrition, employment and income, and measurable poverty reduction.

11. Specifically, the Government will strive to expand agricultural production by about 3.6 percent per annum during the first two years of the PRS period. This will be based on a strong supply response in the food crop sector, with traditional crops such as rice and cassava recovering strongly. Production of non–traditional export crops such as vegetables is also expected to expand rapidly. With support measures being put in place, the tree crop sector will also start recovering by 2009, with cocoa, coffee and oil palm taking the lead. Rubber production, a critical component of agricultural growth, is expected to plateau or decline for some years before starting to recover toward the end of the PRS period.

12. The fisheries and livestock sectors will show some marginal increase during the first year of the PRS. The fisheries sector is likely to accelerate faster than livestock because the recovery measures being undertaken are shorter–term and more easily achievable. Total agricultural production is expected to expand by 6 percent by the end of 2010 and in 2011. To realize the expected growth and achieve the central goal, the Government will focus on three strategic objectives.

13. First, it will aim to develop more competitive, efficient, and sustainable food and agricultural value chains and linkages to markets. Redefining the role of the state and creating space for private sector– led agriculture (with smallholders at the core) will be at the forefront of the Government’s approach to agricultural development. Government interventions will focus on creating a stable environment for private investment, with limited involvement in production and marketing functions. It will aim to clarify property rights and strengthen the security of land tenure, as discussed in more detail in section 7.5. The Government will clarify incentives to promote foreign and domestic investment in the sector and strengthen efforts to ensure adequate agricultural financing, particularly to smallholder farmers. Where there is a need for the Government to directly support essential inputs (mainly improved seeds and fertilizer) to increase production, it will carefully target the most needy (women and smallholders) in order not to retard the development of input markets. The Government will focus on farmer–based and other community organizations in its efforts to build production and marketing capacity amongst smallholders. It will place a high priority on linking smallholders to markets (local, regional and international), the increased participation of MSMEs in the supply chains and value chains, and establishing new institutional arrangements to ensure smallholders benefit from tree crop production. Access to markets will be a major factor in determining which feeder roads are to be rehabilitated first, and the Government will support critical local marketing infrastructure to reduce post–harvest losses. Finally, to ensure that growth is more inclusive than in the past, the Government expects all agricultural concessions to include out–grower schemes appropriate to the subsector, including—in the case of rubber—the creation of formal ties between out–growers and processors.

14. Second, it will strive to improve food security and nutrition, especially for vulnerable groups, including pregnant and lactating women and children under five. As discussed in Chapter Three, 40 percent of Liberians are either highly or moderately vulnerable to food insecurity. High levels of food insecurity and child malnutrition impede socio–economic development and poverty reduction; by one estimate, poor nutrition could lead to productivity losses of US$431 million over the next nine years.⁴⁰ To address these issues, the Government will work to improve access to markets by rebuilding roads, facilitating access to inputs, and increasing market competitiveness and efficiency. The Government will also ensure the wellbeing of vulnerable households which are unable to take advantage of emerging opportunities by developing a targeted social safety net program.

15. Interventions will also be undertaken with respect to the fisheries and livestock industries to increase available food and to strengthen institutional frameworks. As was recommended in the recent draft Diagnostic Trade Integrated Framework Study,⁴¹ recovery measures for fisheries will include improving the monitoring, control and surveillance of Liberian waters, finalizing the establishment of a competent authority to facilitate trade to the European Union and the United States, and preparing for a Fisheries Partnership Agreement with the European Union. The Government will also implement programs to rehabilitate fish ponds. For livestock, a restocking program will be undertaken focusing on small ruminants.

16. Notwithstanding these interventions, disaster mitigation, risk reduction and early warning of food security issues will be critical. The Government will therefore monitor trends in food security and malnutrition to inform decision making and a timely response to emerging problems.

17. Third, it will strengthen human and institutional capacity. The Government will aim to establish functional, efficient and effective institutions to provide needed services, to create a strong enabling environment, and to reduce vulnerability. It will re–establish its role as custodian of Liberia’s natural resources, with special attention to transparency and sustainability in land use, and will promote farmer–based organizations (FBOs) as representatives of farming communities and will ensure their role in locallevel planning. FBOs will play a key role in defining the kinds of services to be provided and will be the main mechanism for building the capacity of farmers. The Government will focus agricultural research and extension services on the needs and priorities identified by the FBOs. It will abolish all statutory monopolies and focus public institutions on their regulatory functions only. It will develop a sector monitoring framework involving all stakeholders to track progress and measure results.

18. The Government will also undertake measures to expand the role of women in the agricultural value chain and increase women’s participation in non–traditional segments of the economy and the labor market. It will incorporate gender issues in rural strategies and programs to ensure that they support the role of women, create opportunities for women in non–traditional rural activities, including women with disabilities, and enhance women’s access to productive assets and services in the agricultural value chain. It will aim to facilitate married and single women’s participation in farmer field schools and other rural community organizations. It will also explore options to create and strengthen the institutional capacity of female producer associations.

19. In seeking to achieve the PRS objectives, the Government will use its existing strengths, i.e., expand existing production systems before introducing new ones. It will focus most immediately on food security. To support production, it will also aim to ensure that sufficient critical inputs are available (preferably through the market, although other modalities may be required) and to make basic improvements in the marketing chain. It will begin to rebuild essential capacity in public institutions as a precursor to wider institutional reform. Over the medium and long term, it will aim to rebuild a comprehensive agricultural extension system and in particular to expand national research capacity in the context of regional initiatives.

7.3 Forestry

20. Prior to 2003, the forestry sector was a major contributor to economic growth in Liberia. Total log and timber production per annum peaked at 1 million cubic meters, with a value of approximately US$100 million. An average of 7,000 persons was employed in the sector. Forestry contributed approximately 50 percent of Liberian export earnings and about 20 percent of GDP.

21. In 2003 the United Nations Security Council imposed sanctions on Liberian log and timber exports because of poor governance in the sector and its role in fueling the conflict. In particular, the Government lacked control over forest areas, revenues were being assigned to individuals rather than Government accounts, human rights abuses were being committed by sector operators, and forest area ownership was often duplicated.

22. After a legal review of the sector, the new Government declared all timber contracts null and void and instituted reform measures that were accepted by the UNSC and led to the lifting of the sanctions in 2006. The reform measures included the enactment of a new forest reform law, forest land use planning, forest institutional reforms, and transparent control of timber production through a chain of custody system. The legal framework and the ground rules have now been laid for sustainable forest management and the economic revival of the sector. Timber production is expected to start in 2008 and steadily increase to a sustainable level by 2012.

23. The central goal for forestry over the PRS implementation period is for the sector to become a source of higher incomes for the rural population, ensuring that the benefits are shared equitably, and that adequate environmental and other regulatory safeguards are in place to ensure sustainability.

24. The Forestry Development Authority (FDA) aims to balance conservation, community and commercial uses in implementing forestry policy. It will focus on the following strategic objectives:

• developing commercial forestry, including by encouraging value–added forestry products, to be a significant source of revenue generation and growth for local people, MSMEs, and the nation at large;

• using community forest management techniques to identify viable economic opportunities for communities from forest resources and providing extension and technical assistance in community forest management;

• conserving protected and important biologically diverse areas, with an emphasis on providing sustainable livelihoods for communities at the fringes of the forest, and promoting tourism;

• enhancing environmental benefits from forestry reserves through an analysis of potential markets for trading in carbon credits; and

• implementing a Chain of Custody Management Contract to induce transparency and protect revenue generation, as well as to maintain a forestry database of pertinent information on available fauna and flora species.

25. Forestry production is projected to grow substantially during the PRS period from 30,000 cubic meters (M3) to more than 1,300,000 M3 (see Table 7.2 below), with approximately 2.9 million hectares of forest being used for commercial and community forestry and 1.2 million hectares allocated for conservation and tourism. Rural employment in this sector is targeted at 5,000 for the three year PRS period.

Table 7.2:

Forestry Production and Revenue

Source: Government of Liberia and IMF staff estimates

Table 7.2:

Forestry Production and Revenue

Forestry Production and Revenue	2007–2008	2008–2009	2009–2010	2010–2011	Total
Production (in ‘000 M3)	44	809	1,055	1,419	3,329
Revenue (in 000 ‘USDs)	526	24,283	36,686	46,110	107,607

Source: Government of Liberia and IMF staff estimates

View Table

Table 7.2:

Forestry Production and Revenue

Forestry Production and Revenue	2007–2008	2008–2009	2009–2010	2010–2011	Total
Production (in ‘000 M3)	44	809	1,055	1,419	3,329
Revenue (in 000 ‘USDs)	526	24,283	36,686	46,110	107,607

Source: Government of Liberia and IMF staff estimates