A new report by the World Bank, the Liberia Country Economic Memorandum, titled “Escaping the Natural Resource Trap: Pathways to Sustainable Growth and Economic Diversification in Liberia,” has highlighted the need for significant institutional and policy reforms to boost economic growth and development in Liberia.
The report provides an in-depth analysis of Liberia’s economic outlook and examines the country’s vulnerability to external shocks, which has hindered sustainable growth. It finds that Liberia’s reliance on a narrow, commodity-based development model has resulted in cycles of stagnation and recovery.
The study warns that a “business-as-usual” scenario will lead to modest growth, insufficient to achieve middle-income status by 2030 and reduce poverty substantially. The report projects that Liberia will not reach the middle-income threshold of US$1,000 until around 2050.
The report emphasizes that institutional and policy reforms are crucial to modernize the public sector and create the necessary conditions for long-term development. These reforms, aligned with the ambitions of the ARREST Agenda for Inclusive Development (AAID), should include:
A systemic overhaul of the business climate to promote private investment. Delivery of higher quality public services, particularly in education and health. Increased efficiency and scale of public investments in power, roads, and digitalization.
The report suggests five key transformations for Liberia, including shifting away from over-reliance on mining, recognizing the private sector as the primary driver of economic growth, and implementing deep-seated public sector reforms.
The World Bank report indicates that Liberia has the potential for significant improvement in the medium to long term if ambitious and credible reforms are implemented. A high-ambition reform program could double annual productivity growth in the non-mining sector, improve education and health outcomes, and drive real GDP growth. With such reforms, Liberia could attain lower middle-income status before 2040 and achieve a real per capita GDP of US$2,000 by 2050.
ABJ/APA