By: Alphanso G. Kalama,
Email: alphansokalama@gmail.com
Sinkor, Monrovia — The World Bank Group’s “Liberia Economic Update 5th Edition” underscores a fragile recovery in Liberia’s economy amidst persistent challenges. The latest report reveals both progress and hurdles in Liberia’s economic landscape.
Liberia’s economy saw a growth rebound over the past three years, with a notable 4.7 percent increase in 2023, driven largely by the mining sector. Gold production surged by 16.4 percent, significantly contributing to economic growth. However, this positive trend is tempered by substantial fiscal and current account deficits. The fiscal deficit climbed to 6.1 percent of GDP due to diminished domestic revenues and overspending, exacerbated by inflationary debt monetization.
The report highlights a widening current account deficit, reaching 24 percent of GDP, which has led to a reduction in foreign exchange reserves and a depreciation of the exchange rate by 22 percent. Inflation has accelerated to a double-digit rate of 10.1 percent, further straining economic stability.
The industrial sector has been a beacon of growth, with gold mining and construction leading the charge. Yet, the agriculture sector has struggled, with only 1.4 percent growth due to falling global prices for key commodities like cocoa, palm oil, and rubber. The services sector, driven by improvements in financial, hospitality, trade, and transport services, grew by 3.8 percent.
Significant structural issues remain, notably in agriculture and energy. Despite advances by the Liberia Electricity Corporation (LEC), such as reduced commercial losses and increased customer connections, energy access disparities persist. Approximately two-thirds of Liberia’s population still lacks reliable electricity. The National Electrification Strategy aims for universal access by 2030 through grid expansion, utility revenue protection, and off-grid solutions. However, the current generation capacity is inadequate, leading to frequent blackouts and underscoring the urgent need for renewable energy development.
The World Bank’s report emphasizes the necessity for ambitious reforms to support Liberia’s energy sector and overall economic growth. The expansion of energy infrastructure, particularly through low-cost renewable sources, is critical for Liberia’s aspirations to achieve middle-income status by 2030. The report also calls for enhanced sector governance, improved financial health of the LEC, and increased private sector investment.
Liberia’s path to sustainable economic growth hinges on overcoming barriers to private sector investment, improving the business environment, and implementing strategic reforms. Leadership and coordination will be essential to drive these efforts and leverage potential opportunities in the clean energy sector.
With significant investment flowing into Africa’s clean energy sector, Liberia has the potential to attract funding and bolster its energy infrastructure, provided it can address existing challenges and foster a conducive environment for growth.
As Liberia navigates these complex issues, the World Bank’s report serves as both a progress report and a call to action for sustained reform and investment in the country’s economic and energy sectors.
