Poverty Reduction Strategy Paper

This paper discusses implementation of the Poverty Reduction Strategy (PRS) in Liberia. Liberia’s PRS articulates the government’s overall vision and major strategies for moving toward rapid, inclusive, and sustainable growth and development during the period 2008–11. This paper 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 Liberia must create much greater economic and political opportunities for all its citizens and ensure that growth and development are widely shared.


This paper discusses implementation of the Poverty Reduction Strategy (PRS) in Liberia. Liberia’s PRS articulates the government’s overall vision and major strategies for moving toward rapid, inclusive, and sustainable growth and development during the period 2008–11. This paper 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 Liberia must create much greater economic and political opportunities for all its citizens and ensure that growth and development are widely shared.

Letter from the President

This Poverty Reduction Strategy (PRS) is truly ours – home grown by all of us. This roadmap for our future reflects the inputs of citizens from all of Liberia’s 15 counties, from market sellers in Ganta to government Ministers in Monrovia, from women and men, boys and girls, members of every political party, every age group, every tribe, and every sector.

The process of developing the PRS is a sign of how far Liberia has come in a few short years. The ideas in this document emerged from an unprecedented series of county consultations, where we broke from our history of Monrovia–dominated government and truly listened to the people of our great nation. The process has been open, collaborative, and peaceful, proving that we Liberians can and do resolve our differences amicably.

In those county–level meetings across the country, Liberians spoke of building a country where a child can live in safety, go to a school with qualified teachers, get clean water and medicine, and study by electric light. The PRS lays the groundwork for making sure that the child’s parents have a fine road to carry their goods to market, and can participate in a local government that is vested with increasing responsibility and resources.

Reducing poverty is not something this government can do alone. It is something we all must do. The private sector – businesses small and large – will increasingly be the engine of growth and jobs. Civil society will continue to serve as a watchdog. The Legislature will be responsible for passing the legislation to build our reform efforts into the bedrock of our institutions.

Our development partners deserve many thanks for the support given as we crafted the PRS. We ask them now to refocus their policies and programs in alignment with the strategy. Their help will be needed to meet the unfunded portion, to give us the ability to build the roads, and the schools, and the clinics of which we dream.

Perhaps the most difficult task falls to the citizens of Liberia. Government can strive to create an enabling environment, but our people must seize these opportunities and work hard to make our collective dream a reality. I believe that our people will do just that.

I am confident that this PRS – representing as it does the hard work and input of all Liberians – will be a framework that will guide us toward rapid, inclusive, and sustainable development.

Ellen Johnson Sirleaf

President, Republic of Liberia



Abstinence, Be faithful, use Condoms


Anti–Corruption Commission


Agriculture Cooperative and Development Bank


Armed Forces of Liberia


Accelerated Learning Program


Antiretroviral Therapy


Bureau of Immigration and Naturalization


Bureau of the Budget




Basic Package of Health Services


Central Agricultural Research Institute


Central Bank of Liberia


County Development Agenda


County Development Steering Committee


County Development Steering Committee


County Education Officer


Common External Tariff


Comprehensive Food Security and Nutrition Survey


Center for National Documents, Records and Archives


Comprehensive Peace Agreement


Civil Service Agency


Census and Survey Processing System


County Statistics Unit


Core Welfare Indicators Questionnaire


District Development Agenda


Demobilization, Disarmament, Rehabilitation and Reintegration


District Education Officer


UK Department for International Development


Demographic and Health Survey


Directly Observed Treatment, Short–course


Economic Community of West African States


Extractive Industries Transparency Initiative


Environmental Protection Agency


Emergency Power Program


Economic Revitalization Committee


Emergency Response Unit


Food Business Operator


Forestry Development Authority


Flora and Fauna International


Financial Institutions Act


Gender Based Violence


General Auditing Commission


Governance Commission


Governance and Economic Management Assistance Program


Gender Equity Working Group


Government Finance Statistics Manual (IMF)


Government of Liberia


General Services Administration


Goods and Services Tax


OCHA Humanitarian Information Center


Highly Indebted Poor Countries Initiative


Infrastructure and Basic Services


Internally Displaced Persons


Integrated Financial Management Information System


International Monetary Fund


Interim Poverty Reduction Strategy


International Union for Conservation of Nature


Kimberley Process Certification Scheme


Land Commission


Liberia Coast Guard


Liberian Dollar


Liberia Domestic Airports Agency


Liberia Employment Action Program


Liberia Emergency Employment Program


Liberia Electricity Corporation


Liberia Extractive Industries Transparency Initiative


Liberia Institute of Public Administration


Liberia Institute for Statistics and GeoInformation Services


Liberia National Police


Liberia Revenue Code


Liberia Reconstruction and Development Committee


Liberia Repatriation, Reintegration and Rehabilitation Commission


Life Saving Skills


Liberia Swedish Vocational Training Center


Liberia Telecommunications Authority


Liberia Telecommunications Corporation


Liberia Water and Sewer Corporation


Monitoring and Evaluation


Monrovia City Corporation


Mining Cadastre Information Management System


Mineral Development Agreement


Ministry of Foreign Affairs


Ministry of Internal Affairs


Ministry of Information, Culture and Tourism


Ministry of National Security


Ministry of Commerce and Industry


Ministry of Defense


Ministry of Education


Ministry of Finance


Ministry of Gender and Development


Ministry of Health and Social Welfare


Ministry of Internal Affairs


Ministry of Justice


Ministry of Labor


Ministry of Lands, Mines and Energy


Ministry of Post and Telecommunications


Ministry of Transport


Memorandum of Understanding


Ministry of Youth and Sports


Ministry of Planning and Economic Affairs


Ministry of Public Works


Mano River Union


Micro, Small, and Medium Enterprise




National Airport Authority


National AIDS Commission


National AIDS Control Program


National Bureau of Investigation


National Commission for Higher Education


National Establishment Census


National Employment Policy


National Fire Service


National Housing Authority


National Housing Savings Bank


National Information Management Center


New Minerals and Mining Law


National Oil Company of Liberia


National Port Authority


National Security Council


National Statistics Development Strategy


National Security Sector Strategy for the Republic of Liberia


National Transitional Government of Liberia


UN Office for the Coordination of Humanitarian Affairs


Office of the National Security Adviser


Orphans and other Vulnerable Children


Post–exposure Prophylaxis for HIV


Public Financial Management


People Living with HIV and AIDS


Prevention of Mother–to–Child Transmission


Participatory Poverty Assessment


Public Procurement and Concessions Act


Public Procurement and Concessions Commission


Public–Private Partnership


Poverty Reduction and Growth Facility


Poverty Reduction Strategy


Roberts International Airport


Road Maintenance Training Center


Search and Rescue


Stakeholders Consultative Committee


Sexual Exploitation and Abuse


Senior Executive Service


Special Economic Zone


Small and Medium Enterprise


State–Owned Enterprise


Statistical Package for the Social Sciences


Sexual and Reproductive Health


Special Security Service


Sexually Transmitted Infection


Transfer of Knowledge through Expatriate Nationals


Truth and Reconciliation Commission


Uniform Code of Military Justice


United Nations Development Programme


United Nations General Assembly Special Session on HIV and AIDS


United Nations High Commissioner for Refugees


United Nations Mission in Liberia


United Nations Police


United Nations Security Council


Value Added Tax


Voluntary Counseling and Testing


Village Profile Assessment


Water and Sanitation

Part 1: History and Current Context

Chapter One From Conflict to Recovery

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.

Figure 1.1
Figure 1.1

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

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$)

article image
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.

Chapter Two The Road Ahead: A Vision for Liberia’s Future

1. The 2005 elections were a watershed in Liberia’s history. The people of Liberia declared loudly and clearly that they wanted an end to war and government mismanagement, and a new beginning based on peace, inclusive economic opportunities, and respect for justice and basic human rights. Liberians want security, freedom, and opportunity: security in their everyday lives, freedom from abuse and oppression, and the opportunity to provide for their families. After more than two decades of misrule, violence and economic collapse, the people have now taken the first bold steps on the long road in this new direction.

2. Liberians want to build a new nation that is peaceful, secure, and prosperous, with democratic and accountable governance based on the rule of law, and with abundant employment and other economic opportunities. The Government’s central objectives over the next three years are to firmly establish a stable and secure environment across Liberia; to be on an irreversible path toward rapid, inclusive and sustainable growth and development; to rebuild the capabilities of and provide new opportunities for Liberia’s greatest asset – its people; and to establish responsible institutions of justice, human rights, and governance.

3. The new Liberia aims to acknowledge and begin to move beyond the divisions, marginalization, and exclusion of the past and to create circumstances where differences are discussed, not fought over. Liberia cannot simply recreate the economic and political structures of the past. It must respond to the deep wounds of the civil war while taking strong steps to establish the foundation for sustained stability and peace in the future. It must therefore create much greater economic and political opportunities for all Liberians, and not simply for a small elite class. Liberia must ensure that the benefits from growth, and the provision of basic health and education services, are spread much more equitably throughout the population, including to women, children and youth, persons with disabilities, and other marginalized groups. It must address the social consequences of the war, including gender based violence (GBV) and the transmission of HIV and AIDS, which continue to permeate society today. It must grant more political power to the counties and districts, build transparency and accountability into government decision–making, and create stronger checks and balances across all three branches of government. Achieving these goals will require the participation and strong commitment of all the Liberian people, including those in the Diaspora, working with the Government, Liberia’s international partners, the private sector, and civil society groups.

4. As a cornerstone of this new Liberia, the Government will continue to consolidate peace, stability, and security throughout the country, and will deepen and build on the more than four years of peace since the end of the conflict. Liberians are deeply grateful for the contribution of the United Nations peacekeepers in helping to maintain the peace and security necessary to hold landmark elections and establish the basis for economic recovery. Looking forward, the country is preparing for the eventual departure of the peacekeepers and the transition toward having its own well–trained, professional security forces under civilian control to serve the people of Liberia. A major part of this effort is rebuilding the Armed Forces of Liberia. But the Liberian people also desire basic security and safety at a community level, so the Government is actively rebuilding and strengthening the police and other security–related personnel. The results are already beginning to show: Liberians now crowd the marketplaces, basic human rights are more widely respected, and investors are showing they believe in the country’s stability.

Building Peace in Liberia

Durable and lasting peace is the sine qua non of Liberia’s transformation and development. While progress has been made since the end of the war, the causes and results of conflict are still alive and present in the political, social and economic environments. Through the PRS, the Government is consciously and deliberately demonstrating its commitment to building a culture of better and more inclusive governance and economic growth, addressing the factors that could breed conflict, and healing a nation that is deeply damaged from war.

Peace–building in Liberia embodies a vision of a society that is peaceful, respects and protects the rights of citizens and ensures that disputes and tensions which are normal to any society are handled in a way that prevents their escalation into organized violence. While the causes of violent conflict in Liberia are multifaceted, deep–rooted and complex, there are six key issue areas that require focused attention throughout all components of the PRS to mitigate their potential to mobilize groups for violent action: land conflicts; the condition of youth especially with regard to employment; political polarization; mismanagement of natural resources; the relationship between the state and its citizens; and weak and dysfunctional justice systems.

Strengthening peace will require both conflict–sensitive implementation of the PRS and a range of complementary, strategic interventions to address conflict factors and enable development. Over the PRS period, with initial support from the Peace Building Fund, the Government will focus on building the capacity of leaders and institutions to develop and implement conflict sensitive policies and programs. With an understanding of conflict issues and methods for addressing them, the Government can set a strong foundation for lasting peace and stability in Liberia.

5. At the same time, Liberia must establish a strong economy with robust employment growth, widespread opportunities for all citizens, and a vibrant private sector, as described in more detail in Chapter Four. It is only through sustained increases in income, coupled with access to improved health and education services, that the poorest Liberians can gain the foothold to climb out of poverty. The Government wants to build an open, strong, competitive economy sustained by strong international trade linkages and significant local and foreign private investment.

6. Liberia’s growth strategy has three prongs: rebuilding roads and other critical infrastructure; reviving the traditional engines of growth in mining, minerals, forestry, and agriculture; and establishing a competitive business environment to help diversify the economy over the medium term.

  • First, Liberia must rebuild its infrastructure, particularly roads. The PRS consultative process revealed that across the country, Liberians’ number one priority is better roads. Participants saw roads as essential for creating jobs and new economic opportunities, revitalizing agriculture, reducing prices, strengthening local governance, facilitating access to health and education services, connecting the population to service centers, increasing the effectiveness of the police and other security forces, and helping to maintain peace.

  • Second, Liberia must quickly revive its traditional sources of economic growth – rubber, timber, mining and cash crops – and ensure that the benefits accrue to all Liberians in a sustainable manner. Concession contracts will therefore differ from the past and the Government will seek to increase the participation of Liberian micro, small and medium enterprises (MSMEs) in the supply chains and value chains of these key growth sectors. The Government is working hard to revitalize agriculture as the bedrock of the economy, as agriculture provides livelihoods for the majority of Liberians. It believes that a vibrant agricultural sector is central to reducing poverty, providing food security, and ensuring progress toward the Millennium Development Goals.

  • Third, the Government will continue to take strong steps to diversify the economy over the medium term into the competitive production of labor–intensive downstream products, manufactured goods, and services. It aims to create an open economy with low tariff and non–tariff barriers, strong linkages to international markets, minimal government intervention except where necessary to address market failure, and low levels of red tape and unproductive regulation.

7. In all of these activities, the private sector will be the main driver of growth. The term ‘private sector’ as applied in the PRS encompasses a wide array of enterprises, from micro businesses to local industrial companies to large natural resource concessions. While attracting foreign investment is critical to growing the economy, the aim is also to empower domestic entrepreneurs to conduct business and create jobs for others, thereby growing the size and purchasing power of the Liberian middle class.

8. The Government will focus only on services that the private sector cannot or will not offer at an appropriate price, such as maintaining safety and security, ensuring the rule of law, providing infrastructure and other public goods, providing basic services for the poor, and establishing a regulatory environment conducive to long–term development.

9. Economic growth alone will not lead to rapid reductions in poverty. The PRS consultative process revealed the importance that Liberians attach to improved education and health services, as well as employment opportunities. The Government is determined to build institutions that can provide quality social services across the country, both to immediately benefit Liberians and to build the foundation for a stronger and more highly skilled labor force in the future. The Government will work to build a public education system that provides better local control over schools, raises the quality of teachers, and promotes learning achievement among all students. It will continue to revitalize health services to increase access, fight major diseases, and reduce malnutrition and maternal and child mortality.

10. In addition to promoting prosperity and improving the delivery of basic services, the Government is determined to help all Liberians move beyond the divisions of the past and establish the foundation for responsible institutions of justice, human rights, and governance. The Government wishes to build an inclusive and highly participatory democracy with strong systems of governance in which rights are respected (especially those of women, children and youth, and persons with disabilities), people are engaged in the governance process, institutions serve the public good, and national resources are used for the benefit of all.

11. Achieving these goals requires building new systems of government, based on accountability, transparency, and the rule of law. There are three key pieces to this effort: strengthening the core capabilities of the executive branch, building the capacity of the Judiciary and Legislature and enhancing their oversight role, and progressively decentralizing government functions across the counties. First, Liberia aims to build a smaller, better paid and more professional civil service. The Government will continue to place a high priority on rebuilding its human capacity, since doing so is central to achieving all of its objectives. It will fight corruption throughout the public service and build effective systems for financial oversight and accountability, including encouraging the development of stronger civil society groups. Second, it will strengthen the judicial and legislative branches of government, and move Liberia away from a system of concentrated executive powers that fostered many of the abuses of the past. Third, it will work to build capacity within local government and progressively shift economic and political power to the counties and communities, so they will be empowered to participate effectively in decision–making and take control of local issues and development processes.

12. These goals are ambitious. They will not be fully accomplished in the three–year time frame of the PRS. But during the next three years, Liberia is determined to make significant progress and build on its strong start in this new direction. Doing so will require the strong commitment of all government actors, their partners, the private sector, and civil society organizations. Most importantly, it will require the continued efforts of the Liberian people, including those in the Diaspora. Liberia’s future is primarily in the hands of its people, not the Government or its partners. The programs and initiatives described in the remainder of this document are aimed at bringing together all the key actors to build the foundation for poverty reduction, growth, and inclusive development.

Chapter Three Poverty in Liberia: The Current Context

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)

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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

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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.

Figure 3.1:
Figure 3.1:

Poverty Head Count9

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

Source: LISGIS 2007

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.

3.3.3 Household Perceptions of Poverty

13. The results of the CWIQ survey and the PPA are broadly similar, which increases confidence in the overall emerging picture.

  • First, households were asked about the level of income or consumption they deemed necessary in order to satisfy one’s needs.11 The average answers were close to the computed poverty lines: LD 21,540 annually for rural households and LD 29,420 annually for urban households.

  • Second, the share of the population in which the head of the household said he or she was “living with difficulty” (as opposed to “living carefully,” “living reasonably well,” or “living very well”) was 58 percent, broadly similar to the headcount index of 63.8 percent.12 In addition, 48 percent of CWIQ respondents perceived their households to be “threatened by poverty”.13 Families perceived to be living in extreme poverty cite loss of a parent, inadequate government support, illiteracy/limited education, lack of farming equipment, lack of access to credit, and large family size as reasons for their plight.14

  • Third, in rural areas, farmers, hunters, female–headed households, returnees and disabled persons are perceived to be the poorest, while former warlords, ex–combatants and their relatives are perceived to be the best off. In urban areas, the uneducated, unskilled workers, orphans/youth, disabled persons, returnees and large families are perceived to be the poorest. By contrast, government officials, owners of big businesses, NGO workers, and professionals are perceived to be the wealthiest.15 This is similar to the CWIQ, which found the well–educated to be financially better off and more traditional laborers and socially disadvantaged to be poorer.

  • Fourth, perceptions differed between rural and urban areas in answering the question ‘What does it mean to be poor?’ According to the PPA, the rural population perceives poverty as a lack of material objects, roads, market access, social structures and services, employment, housing, food and a large family size. In the urban areas, people associate poverty with unemployment, low income, high costs for medicine and education, limited market access and sanitation.

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

3.4.1 Infrastructure

15. Liberia’s infrastructure was severely damaged by the war. Most Liberians have no access to electricity, improved water and sanitation facilities, acceptable housing, or decent roads. Weak infrastructure undermines income earning opportunities, limits access to health and education facilities, raises the price of goods and services, and weakens food security. Women and children bear a large burden as a result of poor infrastructure, as they must spend more time carrying water and other goods; are more vulnerable to crime; and have less access to health facilities, raising the risk of child and maternal mortality. Persons with disabilities are also disproportionately disadvantaged.

16. Perhaps the most critical infrastructure problem is roads, which Liberians across the country consistently placed at the top of their priorities during PRS consultations. Currently there is only around 700 km of paved road surface, almost all of which is damaged, and 1600 km of unpaved roads, which are mostly in need of repair. Farm–to–market access is of paramount concern, and parts of the country remain cut off during the rainy season. It takes at least an hour for most rural dwellers to access a food market or the nearest potential transport option. Roads are central to reducing poverty, as they open up income–earning opportunities for the poor, improve access to health and education facilities, reduce transport costs and commodity prices, and help strengthen local governance.

17. Other transportation infrastructure is equally weak. Many bridges have been damaged and need rebuilding or repair. The limited railway network has not been operational for nearly 20 years. Civil aviation is limited to Monrovia with only UN flights operating upcountry. The Port of Monrovia is operational, but badly damaged and in need of urgent repairs.

18. At the time of the election, there had been no electricity (except from small private generators) or piped water anywhere in Liberia for 15 years. The Government restored power to parts of Monrovia in July 2006, and a further expansion is expected in April 2008. Most Liberians use palm oil, kerosene and candles for light. While significant progress has been made since the end of the war, still only 25 percent of Liberians have access to safe drinking water and just 15 percent have access to human waste collection and disposal facilities.17 Most residents do not treat or boil their water, which has grave implications for the health and nutritional status of the population. Garbage collection is minimal to non existent. 18

19. Many Liberians live in sub–standard housing. The war sparked massive internal displacements, with Monrovia hosting the majority of the IDPs. There is a huge mismatch between the number of urban dwellers and available social services, leading to overcrowding, deteriorating living conditions, and the growth of slums and illegal home occupation. Over a third of the population cannot afford to honor their rent payments, contributing to a high incidence of squatting.

3.4.2 Food Security and Nutrition

20. Food insecurity is high in Liberia and is evident in the poor nutritional status of the population. The Comprehensive Food Security and Nutrition Survey (CFSNS) carried out in March 2006 found that 11 percent of households in rural/semi–urban Liberia are food insecure, while the figure reaches as high as 28 percent in the areas most affected by the war and displacements. Additionally, 40 percent of the population was found to be either highly or moderately vulnerable to food insecurity. The geographically isolated counties in the Southeast are particularly vulnerable to chronic food insecurity. Female–headed households (and the children who live in them) are also more food insecure and spend a greater proportion of their income on food than male–headed households. Over two–thirds of households report they cannot afford three meals a day.19

21. Two out of five Liberian children are growth–stunted and almost 20 percent are underweight. According to one estimate, the failure to resolve key nutritional problems facing children and women in Liberia could lead to economic productivity losses of more than US$431 million over the next nine years. Additionally, anemia, vitamin A deficiency and low body weight are serious factors contributing to child and maternal morbidity and mortality.20

22. Food insecurity and malnutrition are primarily caused by poor access to health, water and sanitation services, inadequate care of mothers, infants and young children, and limited availability and access to food resulting from low agricultural productivity, poor road infrastructure and limited income generating opportunities. Low agricultural productivity is due in part to the majority (53 percent) of rural farms being small, ranging in size from 1 to 4.9 acres.21 Also, about 45 percent of rural households do not own land,22 which limits their access to capital for investment, production and income.

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

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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.

3.4.4 Education

29. Liberia’s educational system is beginning to improve, but remains weak. About 70 percent of schools were damaged or destroyed during the war, and most schools lack books and other basic equipment. Many teachers have little or no training, and teacher attendance is low, at least partly due to low wages. In addition, there are substantial rural–urban differentials in education. However, there is little differential by gender in net primary enrolment (38 percent male to 37 percent female) and secondary school enrolment (16 percent male to 14 percent female).30 In spite of these gains among youth, adult literacy rates display a gap: outside of Monrovia, only about one–third of women are literate, compared to about 60 percent of men.

30. Public primary gross school enrollments have increased by 82 percent in the last two years but remain low. Secondary and tertiary enrollment rates are even lower. Costs remain a barrier to education, despite the Government’s Free and Compulsory Primary Education initiative. Many schools still collect unofficial fees, and the costs of uniforms and other supplies make education unaffordable for many families. In addition, many Liberians criticize the quality of educational facilities, including the availability of textbooks and qualifications of teachers.

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

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Source: CWIQ 2007
Table 3.5:

“Status at a Glance” Liberia and the MDGs

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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.

Chapter Four Building the Foundation for Rapid, Inclusive and Sustainable Economic Growth

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


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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.

Chapter Five The Poverty Reduction Strategy Development Process

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.

Figure 5.1.
Figure 5.1.

The PRS Coordination Structure

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

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.

Figure 5.2
Figure 5.2

Liberia Reconstruction and Development Committee (LRDC)

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

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.

Figure 5.3
Figure 5.3

Organizational and Management Structure of Pillars and Working Groups

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

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.

Figure 5.4:
Figure 5.4:

The Four Pillars as a Strategic Framework

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

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.

5.4.1 Public Consultations

15. The PRS involved an extensive and continuing process of public consultation designed to gain a deep understanding of the citizens’ aspirations, expectations, and priorities, to build national consensus around the country’s development strategy, and to obtain stakeholders’ buy–in to the PRS.

16. The public consultations for the PRS included two–day working sessions in each of Liberia’s 15 counties, during which local participants formulated their respective County Development Agendas (CDAs), and then identified development–related concerns and priorities for the PRS. The CDAs themselves built on earlier district–level consultations and the preparation of District Development Agendas (DDAs).35 This process of soliciting input from the counties on the national PRS after each county and district had just developed their individual development agendas allowed for maximum consistency across district, county and national level policies and programs, and ultimately produced a more holistic national development agenda.

17. The process enabled all citizens to contribute to the development of the PRS. All members of a particular district were invited to attend the district–level consultations. At the county level, meetings included legislative members, traditional leaders, farmers and business people, women, children and youth, persons with disabilities, and local non–governmental organizations, and the public at large. The inclusive nature of the consultations meant that all participants had the opportunity to have their voices heard and incorporated into the PRS process.

18. In addition to these events, other focused consultations were held throughout the country around topics of interest to specific groups of citizens such as women, children and youth, and also around specific issues, such as land use.

19. The outputs of all of these consultations included the identification of local problems and concerns, as well as recommended action plans. Pillars and working groups then considered these outputs in defining their Pillar, sector or thematic strategies. The PRS Core Team subsequently distributed a draft of the PRS to the counties, with three regional outreach consultations undertaken to solicit feedback on the strategy as a whole and to ensure that issues raised at the county consultations had been incorporated into the PRS. The PRS Core Team undertook similar outreach consultations focused on the Legislature, civil society, and private sector actors with respect to the draft PRS. These consultations enabled these groups to provide further input into the PRS in addition to their participation in the broader public consultations, the SCC, and across the various working groups.

Main Public Consultation Messages from the Counties

National Security

While many noted that security had improved since the war, participants in the county consultations identified several common internal security concerns. The most frequently cited were sexual violence and rape, drugs, and theft. County discussions also revealed widespread dissatisfaction with the security and police apparatus. In particular, Liberians noted a shortage of qualified security and police personnel, incidence of police corruption, and low levels of public confidence and trust in the police.

Economic Revitalization

During the discussion around the economic revitalization pillar, participants listed agriculture, roads, and access to finance as their highest priorities. Specifically, participants cited a lack of agricultural inputs, lack of training, and outdated farming methods as issues in the agricultural sector. A shortage of storage and processing facilities, poor roads, and lack of transportation were discussed as key issues in access to markets. Concerns were voiced about the absence of banking facilities in the counties and the lack of credit facilities. Many in the counties voiced concerns about environmental degradation, illegal mining and logging associated with natural resource concessions. With regard to taxes, participants complained that taxes are taken to and spent in Monrovia in a less–than transparent manner, and that the Government has not done enough to explain its tax policies.

Governance and Rule of Law

County consultations revealed concerns over the prevalence of corruption at all levels of government, the prevalence of child labor, and problems with land tenure. On the issue of decentralization, Liberians expressed frustration with the process of selection of county officials, and complained that payments are too centralized, and that government contracts are rarely extended to local firms. Many raised concerns regarding rule of law, particularly around the lack of knowledge about laws (specifically the rape law), judicial corruption, lack of legal aid, poor monitoring and enforcement, and the practice of resorting to traditional means of justice. Citizens complained of frequent delays and abandoned cases in the court system, and the high incidence of mob justice and human rights violations.

Infrastructure and Basic Services

The concern most frequently cited across nearly all counties was the shortage and poor state of roads. People also noted the shortage of safe drinking water and electricity. In the education sector, they expressed concern over the shortage and inadequacy of educational facilities, the shortage of trained teachers, and the under–representation of girls in schools. Likewise, in the health sector, concerns were raised about the shortage of trained medical personnel, the lack of health care facilities and ambulances.

5.4.2 Stakeholders Consultative Committee (SCC)

20. The SCC was inaugurated early in the PRS process and was influential in directing it. Its contributions gained credibility because of the participation of representatives from civil society, the Counties, the Legislature, the various working groups and development partners. Toward the end of the PRS process, the SCC met for a day–long review of the PRS, an event that built on all other consultations and ensured that the final PRS reflects the contributions of Liberian society as a whole.

5.4.3 Pillar and Working Groups

21. The organization of the Pillar and working groups was based on the existing LRDC Pillar architecture, and involved a wide variety of stakeholders, including relevant Government ministries and agencies, civil society, the private sector, and other development partners. Each Pillar and its respective working groups produced strategy papers, undertook costing of different actions, discussed indicators for use in M &E, and laid the groundwork for the sequencing and prioritization of policy in the final PRS. A broad group of stakeholders then vetted the strategy papers to ensure the PRS represented the consensus of all stakeholders. This output, together with the public consultations, was the launching point for the actual drafting of the PRS. Working groups continued to meet periodically throughout the remainder of the PRS process to review drafts of the PRS, as well as to provide further insight into the issues discussed within their working group strategy briefs.

5.4.4 Participatory Poverty Assessment

22. A Participatory Poverty Assessment (PPA) was conducted during the PRS process to gain a deeper understanding of perceptions of poverty based on information provided by the Liberian people themselves. The PPA allowed for direct information on the country’s poverty profile (to complement the DHS and CWIQ surveys, as described in Chapter Three), the priorities of the people at a grassroots level, and the impact of reform measures.

23. The next four chapters spell out the Government’s broad strategies in each of the four Pillars to respond to the poverty diagnostics, the concerns of the Liberian people, and to lay the foundation for rapid, inclusive and sustainable growth and poverty reduction. At the end of each of these four chapters, as well as in Chapters Ten and Thirteen, Priority Action Matrices are included to set out the particular actions that the Government will undertake in the relevant areas, the responsible ministries or agencies, and the delivery dates.

Part 2: The Strategy

Chapter Six Consolidating Peace and Security

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.

Gender Based Violence in Liberia (GBV)

GBV continues to be a major problem, particularly for adolescent girls. Recent studies conducted in ten of the fifteen counties indicate a high prevalence of GBV, which appears to be embedded in a combination of cultural beliefs and behavior acquired during the war years. During the conflict, the perpetrators of GBV were mainly members of the various fighting forces; more recently the perpetrators are ex–combatants, community or family members, teachers and husbands/partners.

GBV impacts the physical and psychosocial wellbeing of survivors long after the abuses are committed. The predominant social and economic consequences of rape are stigmatization by the community and families, divorce/partner abandonment, transmission of sexually transmitted infection including HIV, and unwanted pregnancy. Because of stigmatization, many GBV survivors are unwilling to seek medical/professional help or even to report the assault. In addition, they are deterred by the difficulty and danger of reporting due to gaps in legal, protection, health and psychosocial services that fail to ensure confidentiality and supportive services that GBV survivors need. In many instances, survivors and their families feel that those providing services demonstrate insensitive behavior, including blaming the survivor.

According to the LNP, rape and other sexual offenses rank among the most common crimes reported nationwide. But challenges within the legal/justice, security, health and psychosocial sectors prevail, including lack of data, weak legal and protection systems, shortages of human resources, limited technical capacity, and few financial resources.

To address the gaps, the Government has formed the National GBV Task Force, as well as a GBV Secretariat within the Ministry of Gender and Development. It developed a National GBV Plan of Action to provide appropriate skills to health professionals; improve documentation and reporting on clinical evidence; reform the legal system to deal more efficiently and expeditiously with violence; establish systems and outreach services for survivors; and ensure that women and girls have access to economic and social empowerment programs. Much progress has been made, but a great deal of human, financial and logistical resources are still needed to ensure that lasting change can take place.

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

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Chapter Seven Revitalizing the Economy

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

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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

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Source: Government of Liberia and IMF staff estimates

26. The Government will continue to strengthen the chain of custody system and promote good governance and transparency, in particular by participating in the Extractive Industries Transparency Initiative, under which Liberia is the first country to have it applied to the forestry sector. As a result of these measures, the prospects for revenue growth are strong. Revenues are projected to grow from half a million US dollars in fiscal 2007/2008 to US$24 million in 2009/2010. This will be supported by a shift toward more value–added timber products over the course of the PRS.

27. Concession contracts for commercial forestry (as well as for other agricultural products) will differ from past agreements in several ways. 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. Concession revenues received by the Government will be used to promote public welfare by financing investments in roads, education, health, water, and other areas such as infrastructure and basic services.

28. The Government will undertake community–based natural resource management reforms that focus on boosting economic activity through the sustainable utilization of timber products, non–timber forest resources, and agro–forestry products, while also improving environmental management and conservation. It will establish practical mechanisms to enable communities to become directly involved in forest management and to participate in the equitable sharing of benefits stemming from commercial logging. It will conduct market and value chain analyses to identify likely timber and non–timber forest products that could be promoted through community and MSME forest activities. It will make special efforts to create new opportunities for women in the forestry sector and will also explore the potential for environment– related industries such as eco–tourism, game ranching, and recreation areas. These activities are targeted to increase rural incomes, reduce poverty and build local capacity to maintain and restore forest coverage in the country. To do so the Government will enhance coordination between the FDA and the EPA and other ministries and agencies.

7.4 Mining

29. Mining and panning activities are expected to grow rapidly during the PRS period, from near zero production in 2005/06 to almost 12 percent of GDP.42 Such growth in the mining sector has the potential to contribute significantly to employment, income generation and infrastructure development. The major contributor to this growth will be the resumption of the mining and exporting of iron ore. Iron ore was the mainstay of the Liberian economy between 1960 and 1980, contributing more than 60 percent of export earnings and about 25 percent of GDP.

30. The ArcelorMittal mining operations are expected to initiate the revival of iron ore production when it makes its first projected shipment of 2–4 million tons in 2010. Production at other mines currently out for bid, such as the Western Cluster and Bong Mines, is expected to commence production in four to five years.

31. Gold and diamond mining in Liberia consists largely of alluvial and small–scale operations, with estimates of over 100,000 artisanal miners in Liberia. The sector faces major challenges with unrecorded production, poor working conditions, and a variety of environmental and social problems. During the PRS period, small–scale operations will be encouraged through the support of cooperative schemes, with an emphasis on formalizing their activities and reducing the potential for the sector to fuel future conflict. Efforts must be undertaken to improve the efficiency of recovery methods of alluvial mining and production from medium– to large–scale operations which should increase revenues during the PRS period.

32. There are 26 exploration companies currently holding 53 licenses. Total Government revenues realized from exploration activities for 2007 were approximately US$1.9 million. About 44 new licenses are expected to be issued which could yield additional annual revenue of US$1.2 million. Some of these companies are expected to convert their exploration activities into Mineral Development Agreements (MDAs) during the PRS period. Plans are also underway for development of a discovery of approximately 1.5 million ounces of gold by Mano River Resources in Grand Cape Mount County. This mine, which will be Liberia’s first mechanized gold mine, is expected to be established within two years.

33. The major policy challenge in the mining sector is to develop a national mining sector framework and MDAs that promote growth that is not just rapid, but also inclusive and sustainable, while at the same time minimizing the negative social and environmental impacts of mining activities. In particular, the Government is aiming to develop mining concession contracts that differ from those of the past by better balancing competitive investor returns with the need for robust revenues, and ensuring that local communities share in the benefits through direct and indirect employment, access to new infrastructure, and programs targeted at diversification of activities and local economic development beyond the life of the mine.

34. It is also important that royalty and tax payments, as well as their distribution, are fully reported in a transparent manner. This will help to ensure that Liberia’s resource wealth in mining, as well as in forestry and potentially in crude oil, are used for the benefit of all Liberians, and not to fuel conflict. In addition to the aforementioned LEITI, the Kimberly process will assist in ensuring that the proceeds from diamond exports are not fuelling conflict.

35. These challenges are made more difficult by overlaps and conflicts between different pieces of legislation that govern the sector, and by the lack of adequate logistics, personnel and funding that constrain proper governance, particularly in relation to field monitoring and technical audit functions.

36. The Government’s central goal for the mining sector is to rapidly expand mining as an engine of economic growth and social development, with mining expected to grow to nearly 12 percent of GDP in 2011, and to ensure that the benefits from mining activities are widely shared. The Government will aim to diversify the mining sector into new and downstream activities, and to improve its support to local miners.

37. To achieve this goal, the Government will review and adjust the existing enabling environment for mining sector development. In particular, it will eliminate the overlaps and conflicts between different pieces of legislation, including the conflict between the Public Procurement and Concession Act (PPCA) and the New Minerals and Mining Law (NMML) Act of 2000 regarding the granting of exploration licenses and mining leases. In addition, it will harmonize the NMML and the Forestry Law with respect to mining concession rights and protected zones. It will submit by May 2008 a new fiscal regime for mining and petroleum as part of the proposed pensions to the 2000 Revenue Code. It will also adopt and implement a national mining sector framework with input from communities and stakeholders’ groups that will include the following elements:

  • A National Mineral Policy that will provide a guiding framework for decision makers in the management of Liberia’s mineral resources. The Policy will advocate the optimal development and utilization of these resources, including iron ore, gold and diamonds, through transparent and accountable financial arrangements, the development of local infrastructure, a reduction of adverse social and environmental impacts of mining activities, and the targeting of illegal mining.

  • A Model Mineral Development Agreement (MDA) that will define clear terms and provisions for mining operations, including fiscal, legal, infrastructure, and social and environmental issues. Upon finalizing the Model MDA, the Government will aim to conclude MDAs for the Western Cluster, Bong Mines, Kitomo, Goe Fantro, and Amlib projects, as well as advance the establishment of new mining projects.

  • A Mining Cadastre Information Management System (MCIMS) that will improve management of the mining licensing system by clearly defining property boundaries. The MCIMS will promote transparency in awarding mineral titles to minimize conflicts, and will ultimately be linked to a national land–use registry.

38. To improve support to local miners, the Government’s legal and regulatory reforms will include developing favorable regulations for small–scale mining and the initiation of sensitization and awareness campaigns.

39. In addition to these legal and regulatory reforms, the Government will consider a restructuring of the Ministry of Lands, Mines, and Energy to address the lack of important functional groups, including a mining cadastre office responsible for the issuance and management of mineral licenses and leases; a policy formulation and development group; a group with responsibility for community development and conflict management; and an artisanal and small–scale mining extension service. The Government will also consider implementing the recommendations of the Governance Commission, which included separation of the responsibilities for the functions of lands, mines and energy within the Ministry.

40. Regarding capacity, the Government will develop technical audit functions to enable it to verify production and payments due from mining companies under their contracts once mining activities commence. The MLME will also give special attention to making regional offices operational as soon as possible so as to enable provision of services to mining companies and artisanal miners at the regional level.

7.5 Land and Environmental Policy

41. Poverty, land, and the environment are inextricably linked. The rural poor of Liberia depend almost entirely upon land and other natural resources for their livelihoods, including their food, fuel, shelter, water and medicines. Unequal access to and ownership of land and other resources have contributed significantly to economic and political inequities throughout Liberia’s history, and have exacerbated tensions and conflict. The existing systems of land acquisition favor the wealthy and the elite. Women in particular have had limited land and resource rights. Poverty and the paucity of technical skills leave most Liberians with limited options and few incentives to protect the natural resource base, and make coping with and adapting to environmental changes more difficult. These issues may become even more difficult in the near future as global warming changes climatic patterns, which may affect coastal flooding and rainfall.

42. Access to land and its resources and security of tenure are essential for economic revitalization, growth, and poverty reduction. Smallholder farmers, who make up the majority of Liberia’s rural population, require access and security of tenure to move beyond subsistence farming into more profitable and sustainable livelihoods that will achieve food security and increased export crop production. Commercial users of land and its resources also need security of tenure for investments. Establishing a working system to promote the reconciliation of land disputes during the PRS period, and which can also improve public perceptions about mechanisms and the Government’s capacity for dealing with land conflicts, will have a significant impact on promoting private sector participation in the economy and the overall stabilization of Liberia.

43. In Liberia, the main engines of growth for the next several years are natural resource–based activities – principally mining, timber production, and rubber and other plantations. None of these activities can expand without affecting the resources upon which the rural poor depend. Moreover, new investment in almost any area depends crucially on clear property rights. In addition, the limitations on who can own land in Liberia and the uncertainty about land titling both add to the costs and risks of investments in a wide range of activities, and create prohibitive barriers to investment in some cases.

Land policy is one of the most sensitive and important policies for Liberia in the quest for rapid, inclusive and sustainable growth, and for consolidating peace and security. The challenges, however, are many and complex. There is no comprehensive national policy or strategy on land allocation and use, whether for private users, community, concessions, or Government. Laws pertaining to land are outdated and do not serve the country’s development goals. In the past, concession agreements have had inconsistent provisions, often providing land areas significantly in excess of what can reasonably be developed, while local communities have experienced significant land pressure. Current provisions for the access to land and security of tenure by communities under customary tenure are inadequate. Residents feel that their livelihoods and security are threatened by current laws and practices, and those subject to customary law do not have equal protection as provided by the 1986 Constitution.

45. The judicial system is over–burdened and without sufficient capacity to adjudicate land matters in a timely manner and as a result, fraud is common and entrenched. Moreover, the administration and management of land is inadequate and outdated. Land records are in disarray, are located in several places, and are open to tampering and fraud. There are overlapping or conflicting functions of ministries and agencies, and capacity is extremely limited.

46. The Government’s primary goal with respect to land is to develop a comprehensive national land tenure and land use system that will provide equitable access to land and security of tenure so as to facilitate inclusive and sustainable growth and development, and ensure peace and security.

47. To achieve this goal, the Government’s strategic objectives and priority actions include:

  • Promoting equitable and productive access to the nation’s land, both public and private, especially for the poor, women, and other marginalized groups. The Government will review and reform land policy and law, and develop comprehensive national land use surveying and mapping.

  • Promoting security of land tenure and the rule of law with respect to landholding and dealings in land. The Government will review customary land tenure and existing local government institutions, and will recognize and protect rights of use and ownership of land and other resources by local communities. It will undertake an adjudication process to determine current claims to land, review mechanisms for land dispute resolution under statutory and customary law and propose, if appropriate, alternative dispute resolution mechanisms, and develop procedures for equitable and fair enforcement of laws pertaining to land and other property. The Government will also review the process of issuing public land sale deeds by the Office of the President.

  • Promoting effective land administration and management. The Government will secure and conserve deeds and other records related to rights in land. It will clarify the roles of, and build the capacity within, the Ministry of Lands, Mines & Energy (specifically the surveys unit), the Ministry of Agriculture, and the Forest Development Authority. By building capacity, it expects to be able to undertake a land cadastre in coming years to determine claims to land. However, during the PRS period, the Government will pilot a land registration system.

  • Promoting investment in and development of the nation’s land resources. The Government will review and revise laws pertaining to land and real estate taxation, with the view to discouraging large undeveloped land holdings. Policies and programs will also be developed that enable smallholders to move to more profitable and sustainable livelihoods, and develop national zoning regulations.

48. Because of the critical nature of land in Liberia, the Government will address the issue in a comprehensive manner by establishing a Land Commission. The Land Commission will further identify, guide, and facilitate reforms in land policy, law, and programs. It will aim to facilitate land tenure arrangements that are conducive to sound land use and appropriate farming, forestry, and mining systems that are supportive of inclusive growth and sustainable natural resource management. It will help devise means that balance competing demands on land use, e.g., forest versus farm land, agrarian structure (smallholders versus plantations), and agricultural production (food crops versus export crops). The Governance Commission is working to help establish the Commission by July 2008.

49. To address issues of climate change and the adverse effects of a changing environment, the Government will also consider revitalizing the National Disaster Relief Commission and its secretariat to educate the public about disaster risk reduction and to coordinate the Government’s response to disasters when they do occur. In addition, the Government will endeavor to develop an integrated coastal zone management plan, a wetlands management policy and a water resources management plan to govern the use of, and interaction with, these valuable natural resources.

7.6 Stimulating Private Sector Investment and Development in Downstream Production, Manufacturing, Trade, and Services

50. Although Liberia is endowed with rich natural resources that can help spur growth during the next several years, to sustain growth over the medium–to–long term it will aim to diversify the economy and encourage private sector investment in manufacturing, trade, and services. Liberia has the potential for economic activity in a variety of non–traditional products, including downstream processed products and other manufactures and services such as agro–processing, furniture and other downstream wood products, and downstream rubber products. Investment in such labor–intensive activities can create significant numbers of jobs, encourage MSME growth, stimulate exports, and provide the basis for sustained growth in productivity, skill levels, wages, and income over time. They can create important new economic opportunities for women, young adult workers, persons with disabilities, and unskilled and semi–skilled workers. As such they can be a vital ingredient to generating more inclusive and sustainable growth for all Liberians.

51. However, development of these industries remains in its infancy due to the poor condition of infrastructure, cumbersome procedures, high administrative costs, a largely unskilled labor force and difficulties in firms moving from informal to formal status. Making the transition will take time and a significant improvement in Liberia’s international competitiveness. During the PRS period the Government will aim to lay the foundation for diversification of the economy over the medium–to–long term, and will consider how and when to move forward with steps to achieving accession to the World Trade Organization.

52. The key challenges and constraints to stimulating private sector trade and investment in non–traditional activities include the following:

  • Weak infrastructure, especially roads, power, and telecommunications (see Chapter Nine for further details).

    • Poor road conditions add to production costs and create delays, and significantly undermine linkages to markets for rural enterprises.

    • Electricity is expensive and most micro and small enterprises have little or no access. With public energy generation and grid supplies only beginning to re–emerge in Monrovia, most energy will continue to be supplied by private generators. Restoring generation capacity and the grid network to ensure effective distribution of regular electrical power supply is critical.

    • Telecommunications infrastructure remains weak, and the market needs modernized laws and regulations, with a clear separation of policy and regulatory and licensing functions.

  • Cumbersome procedures and high administrative and regulatory costs. The World Bank Group’s 2008 Doing Business survey ranked Liberia’s business environment in the bottom 25 of 178 countries worldwide. There are a host of administrative and regulatory issues and barriers that severely limit the ability of businesses to operate effectively, including excessive inspections of businesses by public officials, cumbersome business start–up, work permit and other business–related bureaucratic procedures, visa difficulties, unclear investment procedures, informal taxes, and cumbersome customs procedures and charges. Notwithstanding some recent improvements, these costs are a particular burden to small and medium–sized enterprises, as well as to female entrepreneurs.

  • Large Informal Sector. Liberia has an exceptionally large informal sector, currently generating as much as four times more employment than the formal sector. Many women, young adults and persons with disabilities work in the informal sector. While cushioning the impact of the economic collapse, informality has significant economic costs. Informal enterprises also have limited access to capital and business development services which results in their growing more slowly and generating fewer jobs than do formal firms. For those businesses not yet ready for formalization, the challenge for the Government is to implement programs and policies that help improve productivity and working conditions in the informal sector. In addition the Government will need to correct credit market failures in order to enhance access to capital for both the informal sector and those newly formalized, likely fragile businesses. Women and youth face particularly large obstacles in gaining employment and starting businesses and will benefit most from these reforms.

  • Largely unskilled labor force. Many workers have insufficient basic skills, including functional literacy, necessary for productive employment.

  • Limited access to finance. Many firms do not have access to the capital necessary to begin to expand their businesses. This is due to a combination of informality (which makes it difficult to obtain credit), a lack of business skills, and weaknesses in the financial sector as described in the next section. Women in particular face significant barriers to obtaining credit.

  • Relatively small trade linkages with the region and the world. Few firms outside the traditional natural resource sectors export within the region or beyond. Strong integration with global markets is critical for expanding local markets, improving efficiency and obtaining new technologies.

  • Lack of confidence among the general public in the sustainability of reforms. The past disruptions have diminished the public’s ability and willingness to take the risks needed to expand productive enterprises. Overcoming this extreme risk aversion will require a stable, coherent policy setting in which the Government makes modest commitments to improve national welfare and delivers on them.

53. The central goal in the area of private sector investment is to create a strong enabling environment for investment and exports in non–traditional activities by rebuilding infrastructure, reducing unnecessary business costs, streamlining administrative procedures and facilitating trade.

54. The Government’s main approach will be to focus on reducing unnecessary costs of doing business. It is committed to regulatory reform to improve the country’s investment climate and ease administrative and regulatory burdens on private businesses. This approach will create new economic opportunities for small and medium–sized enterprises, and will begin to break down the barriers facing women and other marginalized groups.

55. Specifically, the Government will take the following steps during the PRS period:

  • First, it will rebuild infrastructure around the country, as described in more detail in Chapter Nine. The long–term competitiveness and sustainability of dynamic private investment in Liberia, as well as ensuring that enterprises can develop throughout the country, depend on building adequate and reliable infrastructure.

  • Second, it will take steps to reduce or eliminate unnecessary regulations and administrative requirements that add to business costs. The Government has already appointed a cabinet–level committee to address the high costs and administrative and regulatory barriers related to doing business, and to take specific steps to implement administrative reforms to reduce these burdens. The committee will initially focus on administrative barriers associated with starting a business, licenses, registering property, and trading across borders. It will eliminate redundant and duplicate procedures, and streamline regulations and administrative steps wherever possible. These reforms will benefit all businesses, but will especially benefit MSMEs, female–headed and other informal enterprises where the monetary and time costs of doing business are more acutely felt. Among the initiatives already underway are the development of a streamlined business registration process and eventual computerized business registry, faster granting of permits for construction, the development of a one–stop shop for customs and port clearance, and automation of border clearance procedures within the Freeport of Monrovia.

  • Third, it will take steps to strengthen the financial sector, as described in the next section, to encourage the development of credit markets and to improve access to finance by micro, small and mediumsized enterprises.

  • Fourth, it will continue to improve tax policy and tax administration, working through the Legislature to reduce the corporate income tax rate to 30 percent and to reduce the personal income tax rate to 25 percent. The Government is also considering abolishing the turnover tax as a minimum tax and will progressively align its import tariffs with the ECOWAS Common External Tariff (CET). Over the medium term it will decrease its reliance on import duties and introduce a value–added tax, although the latter may not be feasible during the PRS period given capacity and other constraints.

  • Fifth, it will work with partners to create training programs for women, young adult workers, persons with disabilities, and other marginalized groups to better enable them to take advantage of potential income–earning opportunities.

  • Sixth, it will continue to improve the Investment Code. It is working to develop streamlined investment procedures and to level the playing field between domestic and foreign investors. As part of this strategy, it will take steps to create an appropriate environment for MSME development and to increase MSME participation in the economy.

  • Seventh, it will consider developing one or more Special Economic Zones (SEZs) to promote investment, reduce production costs, generate employment, diversify production and better integrate Liberian firms with regional and global markets. Well–managed SEZs, export processing zones (EPZs), and other export platforms have been an integral part of the success of some countries in diversifying production and stimulating non–traditional labor–intensive exports. In particular, the Government will explore the development of an SEZ near Buchanan. In so doing the Government will fully consider the lessons from cross–country experiences in Africa and East Asia, and has requested support from its partners to that end.

  • Eighth, it will work to strengthen cooperation with neighboring countries in both the Mano River Union and ECOWAS with an eye to increased trade and investment.

7.7 Revitalizing Financial Services

56. An efficient financial sector is essential to poverty reduction, economic growth and social progress. The financial sector is dominated by the banking system, comprised of the Central Bank of Liberia (CBL) and five commercial banks with 13 branches, mainly in Monrovia (with branches in Margibi, Bong, Nimba and Grand Bassa counties). There are also non–bank financial institutions—20 insurance companies, 118 licensed foreign exchange bureaus, three money transfer/remittance entities and five microfinance institutions. The financial sector is narrow and underdeveloped, characterized by limited financial instruments, a low level of financial intermediation, and limited trust among the public. The cash–based payments system is outdated and inefficient. Liberia has a dual currency arrangement with the Liberian and US dollars as legal tender and a market–determined exchange rate.

57. A number of systemic and institutional constraints have contributed to a low level of financial intermediation and availability of financing for productive investments, particularly to small and medium–sized enterprises, as well as rural–based agricultural industries. These include a high volume of non–performing loans, ineffective judicial procedures for loan recovery, high intermediation costs (especially in rural areas), inadequate credit risk management systems, few adequately trained personnel, and non–transparent corporate governance practices.

58. The central goal for the Government’s financial sector reform strategy is to promote a stable, sound and market–based financial system that supports efficient mobilization and allocation of resources to foster sustainable economic growth and poverty reduction throughout the country. The Government expects the financial sector to grow by 10 percent per year during the PRS period, roughly in line with aggregate economic growth.

59. To achieve this goal the Government will focus on the following objectives:

  • modernizing the payments system;

  • ensuring that commercial banks are fully capitalized;

  • exploring ways to address over time the issue of the capitalization of the Central Bank of Liberia;

  • encouraging a sustainable, well–managed microfinance sector as a means of broadening and extending financial services, especially to rural areas;

  • strengthening the legal framework to facilitate the collection of debt and enforcement of financial contracts;

  • developing the necessary legal and regulatory environment to ensure that alternative frameworks for access to finance (such as leasing and equipment finance) can occur;

  • laying the groundwork for developing markets for short–term securities and other money market instruments;

  • improving transparency and efficiency in information–sharing among financial institutions on the creditworthiness of potential borrowers; and

  • strengthening depositor protection and improving confidence in the financial system.43

60. The Government’s financial sector reform strategy focuses on promoting competition and efficiency ins the system to allow it to more effectively support development of the private sector, including in rural areas. This will call for, among other things, intensifying of supervision and regulation of commercial banks and non–bank financial institutions, strengthening prudential controls and improving the credit risk assessment capacity of commercial banks, rationalizing non–performing loans, and improving the existing legal framework for enforcement of financial contracts for the recovery of loans.

61. Ongoing reforms spearheaded by the CBL focus on identifying deficiencies in individual banks and in the banking system as a whole, developing action plans for adequate capitalization and continued capital growth, enhancing corporate governance and risk management systems, developing partnerships with reputable outside banking investors, and promoting the development of microfinance.

62. The strategy’s key policies and actions include the following:

  • promoting the use of checks and other payment instruments through consultation and information sessions with stakeholders;

  • increasing the minimum capital requirement for entities to operate banking institutions;

  • developing a national microfinance policy and modifying appropriate provisions of the Financial Institutions Act (FIA);

  • reviewing and harmonizing existing financial legislation and regulations to make them consistent with the FIA, and preparing legislation to facilitate the collection of debt and enforcement of financial contracts, including the revision of the commercial code and the establishment of a commercial court or alternative dispute resolution mechanisms;

  • preparing a framework for the issuance of short–term securities, possibly including Central Bank of Liberia (CBL) liquidity management instruments;

  • enhancing, in cooperation with commercial banks and business associations, the existing credit reference system in relation to the credit–worthiness of potential borrowers; and

  • strengthening the CBL’s supervisory capacity through the training of staff to perform bank examinations.

7.8 Generating Productive Employment

63. One of the Government’s most important goals during the PRS period is to promote the rapid creation of productive employment that will reduce poverty, ensure peace and stability, and enhance the overall wellbeing of the Liberian population.

64. Rapid job creation is central to maintaining security (especially jobs aimed at the conflict–affected and youth), reducing poverty, and generating income for women, persons with disabilities, and other marginalized groups. Robust economic growth alone will not guarantee widespread job creation, especially to the extent that growth is concentrated in relatively capital–intensive sectors (such as mining). The challenge is to shape the revival of the growth process in a way that promotes to the fullest extent possible the creation of productive and remunerative employment. The major source of job growth will be private sector employment in agriculture, mining, forestry, and construction and other services. This will be complemented by emergency short–term measures that focus on labor–intensive infrastructure projects, urban sanitation and clean–up projects.

65. The major challenges and constraints to increasing employment include the following:

  • outdated labor laws, weak labor administration machinery and poor communication between employers and employees;

  • lack of labor market information systems and labor market data including unemployment data;

  • inadequate and inappropriate skills and knowledge in the labor force;

  • weak linkages between education and labor market needs;

  • unequal and limited opportunities for women, youth, and persons with disabilities; and

  • the impact of malaria, HIV and AIDS, and other diseases on the productive segments of the population.

66. Many of the most important steps for expanding employment are described more fully in other sections on agriculture, forestry, mining, infrastructure and private sector investment. The Government plans to take additional action in three broad areas.

67. First, it will strengthen overall labor policy and administration. The Government plans to introduce a new National Employment Policy. It will review and revise the Liberian Labor Code to make it more responsive to the needs of employees, employers and investors, while promoting fundamental human rights and other workplace standards appropriate for Liberia. The current labor administration machinery needs considerable strengthening, alongside institutional and human capacity building for the fledging employer and worker organizations to promote constructive social dialogue and maintain industrial harmony. In addition, the Government will conduct a National Labor Force Survey to collect more complete information on labor market characteristics and trends. This will include obtaining baseline information on unemployment in Liberia.

68. Second, it will boost employment through labor–intensive public works projects using private contractors. It will complete the transformation of the Liberian Emergency Employment Program (LEEP) through considerable scaling up of pilot projects into the Liberian Employment Action Plan (LEAP). It will place particular focus on labor–intensive rural road projects linked to agricultural production and marketing, solid waste management programs in urban areas, and other essential public works.

69. Third, it will introduce several targeted programs to address specific needs.

  • Skills training. The Government will expand and modernize traditional apprenticeship and other short–term programs in the informal economy and MSMEs. It will strengthen curriculum, improve instructor training and expand vocational training centers across the counties.

  • Opportunities for women. The Government will launch a Women’s Entrepreneurship Program involving MSMEs that will aim to develop business skills, access to microfinance, and functional literacy.

  • Opportunities for youth. The Government will develop and launch a Liberian National Youth Employment Action Plan in the context of the National Youth Policy. LEAP will monitor and facilitate the Action Plan through Key Initiative 2 on Youth and Skills Training, which is headed by the Minister of Youth and Sports, who in turn reports to the Chairman of the LEAP Inter–ministerial Working Committee, the Minister of Labor.

  • HIV and AIDS. The Government in cooperation with the private sector will launch an HIV and AIDS at the Workplace Program which will address issues of prevention, treatment, and care with the goal of reducing the loss of workers and business costs associated with HIV and AIDS.

7.9 Management of State–Owned Enterprises, Parastatals and Regulatory Agencies

70. Liberia’s history of economic mismanagement and corruption was particularly evident with respect to state–owned enterprises (SOEs), regulatory agencies and parastatal enterprises. Inefficient and corrupt practices have restricted the production of goods and services, burdened the public treasury, and hindered economic growth.

71. Liberia’s approximately 15 SOEs, parastatals, and regulatory agencies must be rationalized and restructured. The process of SOE and parastatal reform is already underway. A number of SOEs and autonomous agencies have been provided with minimal budget allocations in anticipation of their dis– solution, including the Agriculture and Industrial Training Bureau, the Bureau of State Enterprises and the National Food Assistance Agency. Some others, notably the Liberia Petroleum Refining Corporation (LPRC), have been internally restructured and have dramatically improved their financial and operational performance. In several SOEs, parastatals and regulatory agencies, the GEMAP framework and other initiatives are improving financial and operational controls and practices. As confirmed in a recently signed MOU with key partners, the Government is committed to a build–operate–transfer (BOT) arrangement for the National Port Authority to facilitate needed investments and managerial improvements.

72. The Government’s objective for SOEs, parastatals and regulatory agencies is to aim for a more complete restructuring during the PRS period, in two parts. First, it will dissolve or privatize SOEs, parastatals and regulatory agencies that are moribund, unnecessary or more appropriate for private ownership. Second, it will continue improving efficiency and economic governance within those that remain. For each SOE, parastatal or regulatory agency it will consider the full range of options, including liquidation, full privatization, privatization with appropriate regulatory controls, public–private partnership to leverage private sector capital for investments, retaining public ownership with a private sector management contract, or retaining public ownership with mechanisms to ensure improved operational and financial performance.

73. The first step will be to finalize the assessment criteria against which the performance and appropriate course of action for each SOE/parastatal/regulatory agency will be judged. These criteria would, inter alia, include the following:

  • whether the core task of the enterprise is a core task of the Government;

  • whether market failure exists that may be rectified by Government intervention, bearing in mind the potential for Government failure to outweigh market failure;

  • whether marginalized groups within society would be denied access to basic goods or services under full private ownership;

  • whether there are strategic reasons for Government involvement; and

  • the extent of the opportunity and financial cost of Government involvement.

74. Once the criteria are finalized by mid–2008, the Government will take the following steps:

  • undertake assessments to determine the appropriate course of action for each SOE/parastatal/ agency, the timing within which any restructuring should occur, and the process by which restructuring operations will be implemented;

  • draft the necessary legislation to effect the rationalization of relevant state–owned enterprises for liquidation, privatization, public–private partnership or appropriate regulatory controls, and then facilitate its enactment and implementation;

  • design and implement restructuring plans for SOEs, parastatals and regulatory agencies that are not to be liquidated, privatized, or transformed into public–private partnerships, to strengthen their management and governance, enhance their efficiency, and improve their operational and financial performance, possibly through the use of performance contracts or regulatory mechanisms; and

  • undertake periodic assessments as to whether the existing structures of remaining SOEs, parastatals and regulatory agencies continue to be consistent with the Government’s objective of dissolving or privatizing those that are moribund, unnecessary or more appropriate for private ownership.

PRS Priority Action Matrix – Food and Agriculture

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PRS Priority Action Matrix – Forestry

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PRS Priority Action Matrix – Mining

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PRS Priority Action Matrix – Land and Environmental Policy

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PRS Priority Action Matrix – Private Sector Investment

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PRS Priority Action Matrix – Financial Sector Issues

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PRS Priority Action Matrix – Labor and Employment

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