Liberia’s largely commodities-based economy, according to the report, relies heavily on imports even for most basic needs like fuel, clothing, and rice – Liberia’s most important staple food.

The report adds that Liberia’s GDP ranks among the lowest in the world, but the economy grew by 4.7 percent in 2023 and is projected to grow 5.3 percent in 2024, according to the World Bank.

The U.S. Department of State released the 2024 Investment Climate Statements (ICS), offering current, detailed insights into the investment environments of over 160 foreign markets, including Liberia.

These statements serve as a crucial resource for U.S. businesses, aiding them in navigating international markets and making strategic decisions about expansion and investment.

Electricity, poor road among vices affecting Liberia’s business climate

Major indicators hurting Liberia’s business climate are low human development indicators, expensive and unreliable electricity, poor roads, a lack of reliable internet access (especially outside urban areas), and pervasive government corruption constraints investment and development, according to the report.

“Most of Liberia lacks reliable power. There are ongoing efforts to expand access to electricity through an extension from the Mount Coffee Hydropower Plant, connection to the West Africa Power Pool, and other internationally supported energy projects,” the report adds.

Many Liberians believe public officials are corrupt, as indicated by the country’’s poor showing in Transparency International’s 2023 Corruption Perceptions Index, where Liberia dropped three places from 142 out of 180 countries in 2022 to 145 out of 180 countries in 2023.

Accordingly, low public trust in the banking sector and lack of access to business financing results in most cash being held outside of banks, the report says. “The Central Bank of Liberia (CBL) and commercial banks are also pushing the adoption of mobile money, which Liberians access through their mobile phones to make everyday purchases and pay bills.”

“However, the government has yet to activate its long-planned National Electronic Payment System (NEPS, aka “the National Switch,”) meaning banking instruments like ATMs and mobile money accounts remain unintegrated and are not interoperable. A World Bank funded project launched in February 2023 is expected to eventually implement the National Switch.”

In practice, the government does little to encourage investment in Liberia. Business leaders report it is difficult to meet with government representatives to discuss new investment or policies to address climate change unless bribes are offered. A weak legal and regulatory framework, lack of transparency in contract awards, and widespread corruption also deter foreign direct investment. Government officials view foreign investors as opportunities for short-term graft, rather than as partners in creating long-term growth for the benefit of the country.

U.S. 2024 Investment Climate Statements on Liberia

Despite these numerous challenges, the report said, Liberia has large expanses of potentially productive agricultural land and abundant rainfall to sustain agribusinesses, while vast mineral resources offer significant potential to investors in extractive industries.

A few large international concessionaires have invested successfully in agriculture and mining, though negotiating these agreements with the government often proves to be a lengthy, politicized, and byzantine struggle for those companies who do not pay bribes. The fishing industry, long dormant compared to pre-war levels, is a potential source of investment, but is struggling to make necessary improvements to meet standards and economies of scale that would open global export markets.

Other Vices affecting Liberia’s business climate

In a damning review of the country’s business climate for the last year, the report highlights that the Joseph Boakai administration has done little to encourage investment in Liberia.

“Business leaders report it is difficult to meet with government representatives to discuss new investment or policies to address climate change unless bribes are offered,” the report adds.

The report adds that government officials view foreign investors as opportunities for short-term graft, rather than as partners in creating long-term growth for the benefit of the country, which they believe results in lack of transparency in awarding contracts and deters foreign investment.

“Government decisions affecting the business sector are driven more by political cronyism than investment climate considerations. Many businesses find it easy to operate illegally if the right political interests are being paid, whereas those that try to follow the rules at best find that they receive little if any assistance from government agencies, and at worst are targeted by government officials seeking direct or indirect bribes or other unofficial payments,” the report added.