By Mengistu E. Wolokolie
The economic situation in Liberia is characterized by high reliance on exports of natural resources and agriculture. One of the major strengths of Liberia’s economy is its productive mining sector. According to the data from the World Bank, this industry has expanded by 24.2% in 2017-2018. The major leaders are gold and iron ore production. There are also substantial incomes from growing of commercial crops, such as palm oil and rubber.
Liberia is a unitary presidential constitutional republic, with its current president being George Weah, who took office in 2018. Despite problems with corruption, Liberia is currently on its path to implementing democracy. The 2005 elections were considered as the most democratic in the country’s history. However, Liberia is still considered as the country with “hybrid regime.” The president is the head of the government and the state. Liberia has a multi-party political system, where executive power is in the hands of the government, while legislative power is exercised by the two chambers of parliament and by the government.
Liberia has been successful in maintaining diplomatic relations with all its international partners. During the two civil wars, Liberia had strengthened its ties with major Western powers, its African neighbors, and the People’s Republic of China. The country has recently attempted to establish a mutual security bloc with Sierra Leone and Guinea, which shows that Liberia has the will to assume a leadership position in the region.
A lot of efforts were made in the recent 30 years to address the social problems facing Liberia, and some of them were relatively successful. It is important to note that Liberia has recorded very impressive Human Development Index gains (more than 2% every year since 2000). Due to the help of the international community and support of the local government, Liberia is currently progressing in fighting corruption, creating social justice, and providing universal primary education.
When analyzing the economic situation in Liberia, it becomes clear that the main weakness of the country’s economy is the lack of diversification and industrial production. In fact, 90% of the country’s gross domestic product (GDP) is generated by non-mining sector which had contracted by 1.3% during 2017-2018.
Another weakness is the country’s reliance on donor transfers, which have a strong impact on Liberia’s current account balance. Furthermore, the country’s poor infrastructure was destroyed during the long period of civil wars.
Liberia’s government is characterized by high political instability. There are unresolved court disputes regarding the collection of petroleum levy. In the run-up to the recent presidential elections, the country had to introduce tax waiver policies, which had significantly reduced fiscal revenues.
The main weakness of Liberia’s government is that the power is centralized in the national government, leaving many local communities without the possibility to influence key decisions that are relevant to them.
The country’s geopolitical situation is very complex. One of the major geopolitical weaknesses of Liberia is that it has difficult political relations with neighboring countries, including Guinea and Sierra Leone.
As for the legal issues facing the country, it is important to note that Liberia’s legislature’s capacity remains weak. There have been some cases of electing inexperienced people having minimal formal education. There are also problems with electoral turnover. Many employees in Liberia’s legal system use their positions for personal gain rather than fighting corruption.
Liberia’s society is characterized by strong tensions among various ethnic groups which make it very challenging to implement structural reforms. The republic was founded by freed Caribbean and American slaves. However, the majority of population are indigenous tribes.
These two groups do not get along well, which spurs many conflicts. During the period of 1990s-early 2000s, Liberia suffered from two devastating civil wars. According to a survey of the population, 40% of respondents believed that tribal and identity divisions were the primary contributors of this deadly conflict.
One of the major economic opportunities in Liberia is the opening of new mining sites. For instance, in the recent years, a new mining site was established by Arcelor Mittal which spurred intensive investments in gold production. Another opportunity lies in agricultural sector as there is high potential for investment in commercial crops, such as palm oil trees and rubber.
Regarding the opportunities of Liberia’s government, it is important to note that it can increase fiscal revenues through taxation of agricultural and natural resources. It can also benefit from improving the business climate in the country and attracting foreign investments.
There is currently a national consensus in Liberia that its unitary system should be reformed because the local levels have been marginalized in making decisions about different issues that affect them. The two options that are now considered are federalization and decentralization.
Analysis of the geopolitical and legal issues affecting Liberia reveals that the country is a major proponent of regional integration of West African states. In fact, there are currently efforts to establish military cooperation and common defense systems with its neighbors. Besides that, such regional integration will create new economic opportunities that will help Liberia to resolve its economic problems.
There are some serious issues in the court system of Liberia which may be tackled by the new regime. Some of the opportunities for improvement include making the court proceedings cheaper for the population, eradicating corruption, and ensuring that people of all backgrounds are treated equally in courts.
One of the major social opportunities for Liberia is that its current pro-democracy course may attract highly skilled people who had fled the country during the period of civil wars. Such influx of professional workforce will serve as a new impetus for economic growth. Another social opportunity is that the government can implement new development programs that will provide justice to the marginalized groups and reconcile the society to make it more cohesive and productive.
High inflation is a significant threat to Liberia’s economy. The country’s currency has depreciated by 28.5% in December 2018 following a long trend of inflation. The welfare of Liberian people is under serious threat due to the lack of employment opportunities and growing cost of living.
Due to a decline in donor transfers, the country faces a threat of reducing foreign reserves. Besides that, the country’s fiscal deficit has widened in 2017-2018 from 4.8% to 5.5% of GDP.
Due to the political instability in the country, Liberia struggles with implementing structural reforms. There is a big need to improve business climate, mobilize domestic revenue, and increase efficiency in public sector investment.
Another threat is that the president of the country is the head of both the state and the government, meaning that the power is centralized in the hands of one person.
One of the serious threats to Liberia’s legal system is that it has been historically dominated by the executive branch of government. There is high probability that this system will be further exploited by corrupt individuals. The country lacks experienced civil society issue advocacy, which will make it hard to control the work of Liberia’s legislature.
In terms of the geopolitical situation, there is also a threat that the political situation with its West African neighbors will become seriously strained, which may result in conflicts and lack of cooperation.
Liberia suffers from numerous social problems, such as growing unemployment, endemic illiteracy, corruption, and institutional racism. Besides that, there are many complex health care issues, such as epidemics of infectious diseases, lack of sanitation, and high infant mortality.
Rapid population growth in Liberia makes it hard for the weak economy to satisfy the needs of the people. There is a high likelihood that all these social problems will eventually lead to a new civil war.
Considering all of the above-mentioned strengths, weaknesses, opportunities, and threats, I propose the government of Liberia to continue its pro-democracy course and focus on improving the economic conditions in the country.
First of all, it is necessary to diversify the economy to avoid being dependent on mining and agriculture as the major sources of income. The government should invest in the social capital and develop infrastructure, thus, improving the business climate and attracting foreign investments.
By improving education, the government will make sure that there are enough highly qualified professionals to fill the positions in the new, industrializing economy. It is necessary to implement reform in the legal system to get rid of corrupt and low-skilled employees.
This will help in achieving justice and fighting with corruption. The country should further develop its diplomatic ties with Western powers and other partners to improve its security and get financial support for its reform programs in health care, education, business, and courts.
Finally, Liberia should assume its role as a regional leader by creating economic blocs and strengthening military cooperation with Sierra Leone, Guinea, and other West African states.
“About Liberia.” UNDP. Accessed April 21, 2019, http://www.lr.undp.org/content/liberia/en/home/countryinfo.html
Cook, Nicolas. “Liberia: Political Transition and U.S. Relations.” Congressional Research Service. Accessed April 21, 2019, https://fas.org/sgp/crs/row/R45195.pdf
Kieh, George Klay. “The Travails of the Unitary State System and Post-Conflict Peacebuilding in Liberia.” Liberian Studies Journal 35, no. 2 (2010).
“Liberia Overview.” The World Bank. Accessed April 21, 2019, https://www.worldbank.org/en/country/liberia/overview
“Root Causes of the Civil War.” PeaceBuildingData. Accessed April 21, 2019, http://www.peacebuildingdata.org/research/liberia/results/civil-war/root-causes-civil-war