The Central Bank of Liberia (CBL) has called for policy reforms and programs aimed at widening Liberia’s export base from the enclave mining sector towards non-traditional commodity exports.
The Bank has warned that reliance on the enclave mining sector for export earnings will not develop the country.
The CBL made the call in its latest 2nd Quarterly ‘Financial & Economic Bulletin.’ The Bank also analyzed that weak global demand for export products from Liberia is affecting the performance of the country’s key export commodities on the world market—iron ore and rubber.
In the second quarter of 2014, the situation posed serious problems for the overall export earnings for the country’s key commodities, rubber and iron ore, outweighing the gains recorded from minerals [diamond and gold] and round logs exported during the quarter relative to the preceding quarter.
Some of the factors undermining this performance include instability in the Middle East and the Ukrainian conflict, as well as the slowdown of growth in the Chinese economy.
These regions are key export destinations of raw iron ore and rubber from Liberia. This is a serious threat to an economy already hit hardest by the Ebola virus outbreak in West Africa. Liberia, a post-conflict economy, was still struggling to rebuild itself prior to the Ebola outbreak.
The Central Bank of Liberia (CBL) has declared that quarterly global iron ore price fell by an average of 15 percent at end-June, 2014, compared to the preceding quarter. The Iron ore price also fell by an average 18.2 percent on the world market, compared to the corresponding quarter in 2013.
The price of rubber, Liberia’s key export crop, also fell on average by 5.9 percent and 27.1 percent compared to the end of the first quarter of 2014 and end-June 2013, respectively.
In its Financial & Economic Bulletin covering April-June, 2014, the CBL noted that “with growth in emerging markets projected to slow further during the remainder of 2014, iron ore and rubber prices are expected to continue the downward spiral.”
On the domestic front, the Bank has attributed the declines in iron ore and rubber exports volumes to the rainy season and the replanting in the rubber sector to replace aging rubber trees, which it says affected the performance during the quarter.
As iron and rubber were underperforming, minerals [gold &diamond] and logs export earnings were, however, outperforming the levels recorded in the preceding quarter. The CBL reports that diamond export receipts rose by 14.9 percent, while gold export receipts also increased by 62.5 percent.
The growth in gold and diamond exports earnings was on the back of increased in domestic production as a result of the discovery of new fields. The temporary lifting of moratorium placed on logging by President Ellen Johnson Sirleaf largely led to improvement in round logs exports.
Despite the good performance by the minerals [gold &diamond] and logs, the country’s overall merchandise exports earnings fell by 11.1 percent at the end of the second quarter, 2014, which the CBL attributes largely “on account of the 41.7 percent year-on declines in rubber export receipts.”
Import payments rose by 5 percent and this was driven by increased import payments on food and other consumables. Import payments on rice, Liberia’s staple food, however, dwindled by 15.7, percent due to the declining price of the commodity on the world market.
According to the CBL, import payments on chemicals and related products increased during the quarter due to the Ebola crisis and the heightened public health crisis facing the country.
The Bank says it expects increased import payments on commodities in this category for the remainder of the year.