Economy of Liberia

Economy of Liberia
A street in Monrovia
Currency	Liberian dollar (LRD)
Fiscal year	Calendar Year
Trade organizations	AU, African Development Bank, ECOWAS, MRU, WAMZ, World Bank, IMF, WTO, Group of 77
Statistics
GDP	$2.719 billion (PPP) (2012 est.) Rank: 185 (2012 est.)
GDP growth	8.3% (2012 est.)
GDP per capita	$700 (PPP) (2012 est.) Rank: 224 (2012 est.)
GDP by sector	agriculture 62.7% industry 6.4% services 30.8% (2010 est.)
Inflation (CPI)	6.9% (2012 est.)
Population below poverty line	80% (2000 est.)
Labor force	1.372 million (2007 est.)
Labor force by occupation	agriculture 70% industry 8% services 22% (2000 est.)
Unemployment	3.7% (2010 est.)[1]
Main industries	rubber processing, palm oil processing, timber, diamonds
Ease-of-doing-business rank	151st[2]
External
Exports	$774.8 million (2012 est.)
Export goods	iron, diamonds, timber, rubber, cocoa, coffee
Main export partners	China 24.2%  United States 15.4%  Spain 11.1%  Thailand 4.5%  Côte d'Ivoire 4.4%  Malaysia 4.1%  France 4.0% (2012 est.)[3]
Imports	$2.275 billion (2012 est.)
Import goods	machinery, transportation equipment, fuel, chemicals, manufactured goods, food, Foreign Aid
Main import partners	South Korea 26.4%  China 24.1%  Singapore 23.0%  Japan 15.9% (2012 est.)[4]
Gross external debt	$348 million (31 December 2012 est.)
Public finances
Revenues	$481.5 million (2012 est.)
Expenses	$522.3 million (2012 est.)
Economic aid	recipient: International multi-billion dollar debt relief and development aid
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars.

Liberia is one of the poorest countries in the world, and its economy is extremely underdeveloped, largely due to the First Liberian Civil War in 1989-96. The civil war destroyed much of Liberia's economy, especially the infrastructure in and around Monrovia. The war also caused a brain drain and the loss of capital, as the civil war involved overthrowing the Americo-Liberian minority that ruled the country. Some returned during 1997, but many have not.

Richly endowed with water, mineral resources, forests, and a climate favorable to agriculture, but poor in human capital, infrastructure, and stability, Liberia has a fairly typical profile for Sub-Saharan African economies - the majority of the population is reliant on subsistence agriculture, while exports are dominated by raw commodities such as rubber and iron ore. Local manufacturing, such as it exists, is mainly foreign owned.

The democratically elected government, installed in August 1997, inherited massive international debts and currently relies on revenues from its maritime registry to provide the bulk of its foreign exchange earnings. The restoration of the infrastructure and the raising of incomes in this ravaged economy depend on the implementation of sound macro- and micro-economic policies of the new government, including the encouragement of foreign investment.

Economic history

The Liberian economy had relied heavily on the mining of iron ore prior to the civil war. Liberia was a major exporter of iron ore on the world market. In the 1970s and 1980s, iron mining accounted for more than half of Liberia's export earnings. Since the coup d'état of 1980, the country's economic growth rate has slowed down because of a decline in the demand for iron ore on the world market and political upheavals in Liberia.

The United Nations imposed sanctions on Liberia in May 2001 for its support to the rebels of the Revolutionary United Front (RUF) in neighboring Sierra Leone. These sanctions have been lifted following elections in 2005.

In March 2010, Bob Johnson, founder of BET, funded the first hotel constructed in Liberia in 20 years. The 13-acre (53,000 m²) luxury resort was built in the Paynesville section of Monrovia.^[5]

Liberia's external debt was estimated in 2006 at approximately $4.5 billion, 800% of GDP.^[6] As a result of bilateral, multilateral and commercial debt relief from 2007 to 2010, the country's external debt fell to $222.9 million by 2011.^[7]

Economic sectors

Boy grinding sugar cane 1968

Liberia's business sector is largely controlled by foreigners mainly of Lebanese and Indian descent. There also are limited numbers of Chinese engaged in agriculture. The largest timber concession, Oriental Timber Corporation (OTC), is Indonesian owned. There also are significant numbers of West Africans engaged in cross-border trade. Legal monopolies are possible; for example, Cemenco holds a monopoly on cement production.

Unlike almost all other countries in the world, Liberia has not adopted the metric system as its primary system of measurement.

Forestry

Timber and rubber are Liberia's main export items since the end of the war. Liberia earns more than $100 million and more than $70 million annually from timber and rubber exports, respectively.

Mining and resources

Alluvial diamond and gold mining activities also account for some economic activity. In recent years (2005 - 2012), foreign investment from ArcelorMittal Steel, BHP Biliton, and China Union is aiding the revitalization of the iron-ore mining sector.

Liberia has begun exploration for offshore oil; unproven oil reserves may be in excess of one billion barrels.^[8] The government divided its offshore waters into 17 blocks and began auctioning off exploration licenses for the blocks in 2004, with further auctions in 2007 and 2009.^[9][10][11] An additional 13 ultra-deep offshore blocks were demarcated in 2011 and planned for auction.^[12] Among the companies to have won licenses are Repsol, Chevron, Anadarko and Woodside Petroleum.^[13]

Shipping flag of convenience

Liberia maintains an open maritime registry, meaning that owners of ships can register their vessels as Liberian with relatively few restrictions. This has meant that Liberian ship registration is usually understood as the employment of a flag of convenience. Liberia has the second-largest maritime registry in the world behind Panama, with 3,500 vessels registered under its flag accounting for 11% of ships worldwide.^[14][15] This includes 35% of the world's tanker fleet. Liberia earned more than $18 million from its maritime program in 2000.

Foreign aid

Liberia has relied heavily on vast amounts of foreign assistance, particularly from the United States, Japan, Britain, France, Italy, Germany, the People's Republic of China, and Romania. But because of the Liberian Government's perceived disregard for human rights, foreign assistance to Liberia has declined drastically.

The Republic of China (Taiwan) and Libya are currently the largest donors of direct financial aid to the Liberian Government. Significant amounts of aid continue to come in from Western countries through international aid agencies and non-governmental organizations, avoiding direct aid to the government.

Communications

Communications in Liberia refers to the press, radio, television, fixed and mobile telephones, and the Internet. There are six major newspapers in Liberia, and 45% of the population has a mobile phone service.

Even as it struggles with economic and political constraints, Liberia’s media environment is expanding. The number of registered newspapers and radio stations (many of them community stations) is on the rise despite limited market potential. And politically critical content and investigative pieces do get published or broadcast.^[16]

Energy

Formal electricity services are solely provided by the state-owned Liberia Electricity Corporation, which operates a small grid almost exclusively in the Greater Monrovia District.^[17] The vast majority of electric energy services is provided by small privately owned generators. At $0.54 per kWh, the electricity tariff in Liberia is among the highest in the world. Total installed capacity in 2013 was 20 MW, a sharp decline from a peak of 191 MW in 1989.^[17]

International economic networks

A proportional representation of Liberian exports. The shipping related categories reflect Liberia's status as an international flag of convenience - there are 3,500 vessels registered under Liberia's flag accounting for 11% of ships worldwide.^[14][15]

Liberia is a member of the Economic Community of West African States (ECOWAS). With Guinea and Sierra Leone, it formed the Mano River Union (MRU) for development and the promotion of regional economic integration. The MRU became all but defunct because of the Liberian civil war which spilled over into neighboring Sierra Leone and Guinea.

See also

• Central Bank of Liberia
• Transport in Liberia
• Tourism in Liberia

References

External links

• 68% of Liberians live in poverty census reveals
• Economy of Liberia at DMOZ
• Mineral resources of Liberia
• Liberia latest trade data on ITC Trade Map
• Liberia profile - World Bank