Liberian Children Developing at 32% Potential

The highest losses of human capital in Liberia are due to poor schooling  

… “Liberia's human capital outcomes are amongst the worst in the world largely due to slow progress in education and health,” said Gweh Gaye Tarwo, the World Bank Country Economist of Liberia.

A child born today in Liberia (PDF) may attain just 32% of their potential, owing to the country's poor investment in human capital development, the World Bank has said.

The assessment from the Bank reveals that Liberia’s Human Capital Index (HCI), means that many children in the country have their future limited by the circumstances in which they are born, but it also entails difficulties for the economic development of the country. 

The HCI measures the human capital that a child born today can expect to attain by age 18, given the risks to poor health and poor education that prevail in the country where she lives. The HCI is an index that takes values between 0 and 1 based on five variables that are likely to affect the earnings of the future generation of workers and groups them into three components — survival, school and health.

At just 0.32, Liberia is ranked at the bottom of the Human Capital Index, performing better than only three African countries in the world—namely, the Central African Republic (0.29), Chad (0.31), and South Sudan (0.31)—out of 174 countries assessed, the Bank said.   Mauritius is the best performer in Africa, with a score of 0.62.

Also, Liberia has the lowest human capital in ECOWAS, together with Mali and Niger. Ghana (0.45) is the best performer, scoring 41 percent higher than Liberia, followed by Togo (0.43), The Gambia (0.42), Senegal (0.42), and Benin (0.40), the Bank added. 

Further afield, Singapore in the best performer in the HCI with an index of 0.89, meaning that a child born in Singapore in 2020 can expect to be 89 percent as productive as she could be when she grows up, while the worldwide average for how productive a child can expect to be is 56 percent of her potential.

“Liberia human capital outcomes are amongst the worst in the world largely due to slow progress in education and health,” said Gweh Gaye Tarwo, the World Bank Country Economist and author of the report, Liberia Economic Update with the theme: “Investing in Human Capital for Inclusive and Sustainable Growth“. 

 “Thus, improving the country’s human capital outcomes would require significant interventions in the health and education sectors. Investing in human capital will be crucial for Liberia to grow faster, reduce poverty, and deliver substantial social benefits in the long term. The Liberian Government has made some strides in these sectors, but more can be done,” he pointed out.

The Liberia Human Index of 0.32 implies that the government of Liberia has not done much to accelerate more and better investments in people for greater equity and economic growth. 

In 2020, the Bank said, 50 percent of Liberia’s loss of human capital was due to poor education, an increase of 9 percentage points — a signal that a child born today in Liberia may reach only 32 percent of productivity potential due to shortfalls in education and health. 

Human capital, which is key to ending extreme poverty and creating more inclusive societies, consists of investing in the knowledge, skills, and health of the people who invest in and accumulate throughout their lives, enabling them to realize their potential as productive members of society.

The country's human capital gap, according to the report, was mainly driven by poor education (contributing 50 percent), poor health (12 percent), and survival (7 percent). 

“One of the factors leading to Liberia’s low human capital outcomes is weak governance. Liberia is working to build rules-based public sector governance, but the country has been facing obstacles rooted in its political economy. Liberia’s governance improvement agenda continues to be hampered by a limited administrative capacity and an entrenched patronage system, among other factors.” 

“The country’s governance metrics progressively improved from 2005 to 2011, but progress has been limited since then, and the country presently lags behind Sub-Saharan African countries, on average (World Bank 2018).  This is a crosscutting bottleneck observed in education, health, and social protection, and it deeply affects service delivery and leads to poor outcomes.” 

The underlying factors contributing to the country’s low human capital outcomes include weak institutions, ineffective service delivery, demographic pressures, and low and inefficient social spending, resulting in unresponsive or suboptimal service delivery, the Bank said. 

The Bank Human Capital Index considers five variables that could be grouped into three components—survival, school, and health— that are likely to affect the earnings of the future generation of workers. 

On Liberia, the Bank said, the country's poor index outcomes reflect  low and inefficient spending on social sectorsInadequate funding, the low prioritization of human development, and the paucity of substantial results obtained from these investments are major problems. 

The highest losses of human capital in Liberia are due to poor schooling as the country loses to poor schooling 61 percent of the human capital it could aspire to with full survival to age five and full health, the bank added. 

In 2020, the Bank said, 50 percent of the loss of human capital was due to poor education. School enrollment rates have broadly declined during the period under review, yielding a lower number of years of schooling a child born today can expect to have completed by the time she reaches age 18.

“A child born in Liberia today can expect to obtain only 2.2 years of effective quality schooling by age 18, given the prevailing pattern of enrollment rates and current scores in harmonized tests from major international student achievement testing programs.” 

“Countries that invest in their people are better positioned to benefit from the changing global economy. They tend to alleviate poverty much more quickly. Liberia would be well-advised to refocus its policy and strategic dialogue, as well as its development narrative, on human capital,” Bank said. 

“Both should emphasize the importance of empowering women (through child spacing and family planning, as well as curbing child marriage and early childbearing); investing in young children (to reduce under-five mortality and stunting); and increasing access to education, especially for overage children, while improving the quality of education throughout the system. This report suggests a need for stronger investments in people in Liberia.”

Meanwhile, the Bank has in its report said that the Liberian economy experienced strong growth in 2021 after contracting by 3.0 percent in 2020 due to the COVID-19 pandemic, and growth recovered to 5.0 percent in 2021.

The rebound was driven by improved external demand, higher prices for Liberia’s main exports, and the resumption of normal domestic activity. 

Growth slowed in the first half of 2022, even when mining and construction continued to perform well. In agriculture, rubber and cocoa production dropped by 13.5 percent and 27 percent, respectively. In the industrial sector, iron ore, gold, and cement production all increased, reflecting firmer international prices and an uptick in construction activity, the Bank added. 

It added that however, services growth fell, as reflected in the decline in beverages and electricity production.

“The positive economic growth of 5.0 percent in 2021 from the COVID-19-induced recession in 2020 is important for Liberia’s efforts to reduce poverty,” said Khwima Nthara, World Bank Country Manager for Liberia. “Going forward, the focus should be to sustain the recovery and ensure that growth is inclusive through investments in human capital, social protection, and labor-intensive productive sectors such as agriculture.” 

Accordingly, growth is projected to slow down to 3.7 percent in 2022, reflecting increased global uncertainties and commodity price shock, but reach an average of 5.2 percent over 2023-2024. 

Beyond 2022, the Bank noted,  growth is underpinned by significant tailwinds for mining, the government’s planned scale-up of public investment, and the implementation of structural reforms including in key enabling sectors (such as energy, trade, transportation, and financial services).

“Inflation is projected to remain low and stable, averaging 7.2 percent per year in 2022-2024. Sustaining low levels of inflation would help Liberian households to retain their purchasing power, and it is projected that by 2023 poverty rates will start to decrease,” the Bank said. “The fiscal deficit is projected to widen to 4.3 percent in 2022 but improve in the medium term with reforms aimed at improving domestic resource mobilization and consolidating expenditures. Notably, the lingering effects of the war in Ukraine could pose significant risks to the outlook”.