The Central Bank of Liberia over the weekend launched Liberia’s Financial Sector Development Plan (FSDIP) in Monrovia, aimed at providing a prioritized, sequenced, and time-bound roadmap for 63 implementing reforms in banking, insurance, banking and insurance supervision and credit information systems.
Other areas include payment systems, and digital finance, social security, financial inclusion, enterprise access to finance, and anti-money laundering or countering finance terrorism.
The Financial Sector Development Plan (FSDIP) was produced by the Central Bank of Liberia (CBL) with technical assistance from the World Bank Group and the financial support of the Financial Institutions Reform and Strengthening (FIRST) Trust Fund Initiative.
Vice President Joseph Nyumah Boakai, who served as the chief launcher and keynote speaker, said the leadership of CBL under Governor Milton Weeks and his predecessor deserves commendation for bringing a comprehensive reform to the country’s financial system.
“There is no denial that our financial sector has not remained immune to the turbulence that has hit the global economic system,” VP Boakai added.
He noted that Liberia’s public financial systems are challenged with rigorous, regulatory, legal, structural and contemporary constraints when compared to the financial systems of other countries in the sub-region. Given these challenges, he said, Liberia has deprived herself of many investment opportunities.
“Moreover, this financial system is narrow and needs to be deepened to attract innovation that will introduce a financial market that will identify and match surplus with existing deficits,” he said.
According to VP Boakai, when compared to other countries in the Mano River Basin, Liberia has made a significant stride in improving the spheres of regulation and supervision of the financial sector’s stability and access.
Speaking earlier, Governor Weeks said between 2014 and 2015, the banking sector grew in capacity to almost 9 percent, adding that it is well capitalized.
“With the capital adequacy ratio of 21 percent and the sector having 39 percent of liquid (finance), the commercial banking loans only increased to 1.2 percent between 2013 and 2014,” Mr. Weeks said.
He noted that the commercial bank loans, however, grew up to 24 percent between 2014 and 2015.
“Loans to agriculture establishments, manufacturing, among others, experienced a rise up to 76 percent between 2014 and 2015,” the CBL governor said.
Mr. Weeks said “despite these improvements, access to capital remains a challenge in Liberia.” He noted that banks provide only 10 percent of loans to micro, small and medium enterprises (MSME) and agriculture.
“The existing micro-finance sector also remains relatively small and many lack access to leasing and other forms of longer term finances,” Weeks said.
According to him, FSDIP will also provide donors a guide to GOL’s financial sector development priorities to help assess where and how donor assistance can complement the government’s priorities.
Governor Weeks commended the World Bank and other partners who have played pivotal roles in helping the Central Bank develop strategic plans and systems that are today ensuring the appropriate control of state funds.
For his part, the Minister of Finance and Development Planning (MFDP), Boima Kamara, said FSDIP is one of the instruments expected to go to the heart of strengthening Liberia’s financial system.
“The development of Liberia’s financial system is an absolute imperative for investments and the diversification of our economy because the financial system is an engine for growth and the key ingredient for social protection,” Mr. Kamara noted.
He said the key role government expects from the banking and micro-finance related activities in accelerating credit to the private sector as well as from the perspective of the insurance sector, is to help build and strengthen the country’s financial sector.
“This lends great importance to the development of modernized and advanced payment systems such as the use of VISA Cards,” the Finance Minister said.
Also in attendance were representatives from the African Development Bank, the International Monetary Fund, the World Bank, and others.