Strictly Confidential © 2014Strictly Confidential © 2014
LIBERIA RECOVERING –CHALLENGING ROAD AHEAD
TICAD SEMINAR SERIES
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Presentation Outline
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From Post Conflict to Ebola Shock
Ebola Shock and Its Impact
Post- Ebola Recovery
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From Post Conflict to Ebola Shock
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Liberia emerged from conflict in 2003 with:
• Collapse of growth: GDP per capita collapse from a peak of US$840 to about US$160 in 2007
• A large debt overhang: Liberia’s public and publicly guaranteed external debt at end-June 2007 was estimated at US$4.9 billion, including US$1.2 billion of commercial debt, 96 percent of which was in arrears
• High levels of poverty: The first estimate of poverty in 2007 put the poverty headcount at 63.8 percent
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From Post Conflict to Ebola Shock
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Liberia emerged from conflict in 2003 with:• Infrastructure destroyed: roads not accessible all year
round, electricity access severely limited serving less than 5,000 costumers; Port of Monrovia marginal wharf on the brink of collapse
• Public services were in shambles: in 2004, less than 10% of Liberia’s population had access to health care, more than 50% of its school age children were out of school
• Weak Governance/Fiduciary systems: No audits for more than 20 years; no robust PFM law, regulations or system; no functioning procurement system (GEMAP in 2005)
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From Post Conflict to Ebola Shock
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Since 2006 Strong GDP Growth Driven by:
• Initially by the rubber sector and a recovery in domestic agriculture and services
• Since 2010 by the return of iron ore mining (up approximately 6-7 million tons in 2014)
• Increased activities in the services sector led by the hotel and construction sub-sectors
• Manufacturing sector driven largely by domestic demand from hotels and construction sector
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From Post Conflict to Ebola Shock
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0.0
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2006 2007 2008 2009 2010 2011 2012 2013
Perc
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Real GDP Growth
Growth
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From Post Conflict to Ebola Shock
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‐10.0
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2006 2007 2008 2009 2010 2011 2012 2013
% of G
DP
Revenues Expenditures Fiscal Balance
The Budget was largely in balance
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From Post Conflict to Ebola Shock
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Major constraints to broad-based growth remained:• Weak infrastructure –especially roads and power.
• High cost – tariffs more than US$0.50 /kwh• 3 percent of the population connected to the electricity grid. and paying
more than US$0.50 per KWH• Few all-year round roads thus limited access to markets
• Limited access to finance• Weak and unclear property rights, weak contract
enforcement• Low levels of human capital (60 percent of the labor
force have not completed primary schooling)
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Transformation on Path to Middle-income Status
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Agenda for Transformation (2012-2017)
• Based on Vision 2030 to achieve a middle-income status• Strategic foundation of the Agenda for transformation rests
on four pillars:– Peace, Security and the Rule of Law– Economic Transformation– Human Development– Governance and Public Institutions
• Cross-cutting Issues (environment, youth, gender, etc.) constitute the fifth pillar and support the core pillars
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Transformation on Path to Middle-income Status
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AfT Results:• Power projects: expanded distribution in Monrovia; three
corridor T&D projects, WAPP, HFO generation plants• Road infrastructure: 477 km roads paved; 1500 km rural
feeder roads rehabilitated; 700+km primary roads with feasibility studies
• Major reduction in malaria incidence; gross primary school enrollment increased.
• Institutions strengthened – LRA established, public investments increased, more agencies included in financial management system
How
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Country Partnership Strategy - Original IDA programFY Project USD
milFY 13 -14
AF - Liberia Road Asset Management Project(LIBRAMP)Liberia- Accelerated Electricity Expansion Project(LACEEP)Liberia Health Systems Strengthening ProjectBudget SupportAF –Liberia Urban and Rural Infrastructure Rehabilitation Project( URIRP) Budget Support Transformation on Path to Middle-income Status Civil Service Reform Project
5035101012102
Total Delivered 129
FY 15 Transport Project (Ganta to Harper road) Budget SupportYouth Employment/SSN Land Administration
805109
FY16 AF - Accelerated Electricity Expansion Project(LACEEP)Budget Support
605
FY17 Natural Resource Management Governance Project – indicativeBudget Support
55
TotalFY15-17
Planned 179
Transformation on Path to Middle-income Status
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Ebola Shock
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• Businesses closed• Major contractors invoked force majeure• Most airlines stopped flying• Schools closed• Health system stopped functioning• Government revenues redirected to Ebola
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Ebola Shock
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Impact:• Reduced growth from projected to less than 1 percent for
2014;• The already fragile employment situation adversely
affected-half of household heads being unemployed;• Hiked inflation to above 13 percent in the peak of the crisis,
with adverse impact on food vulnerability;• Fiscal deficit substantially widening from 1.9 percent of
GDP in FY13/14 to nearly 10 percent of GDP in FY14/15;• Inability to deliver key social services including basic health
services leading to preventable deaths
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Ebola Shock
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Growth slowed considerably from over 8 percent in 2013 to less than 1 percent in 2014 and to zero in 2015
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2013 2014 2015
Percen
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Real GDP Growth
Growth
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Ebola Shock
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Revenues collapsed but spending, mainly on health, increased the fiscal deficit to more than 8 percent of GDP
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2013 2014 2015
% of G
DP
Revenues Expenditures Fiscal Balance
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Ebola Shock
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Liberia’s economy has been hit by:
• Overall exports, which amounted to US$559 million in 2013, fell to US$436 million in 2014 and shrunk to US$232 million in 2015;
• Fiscal revenues from the mining sector collapsed from US$54.7 million in 2014 to US$28.9 million in 2015;
• Revenues from rubber and oil palm also fell from US$12.1 million in 2014 to US$9.7 million in 2015.
Commodity price decline added an extra shock to the decline
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Ebola Shock
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Impact on Human Development:
• 8018 total suspected, probable and confirmed EVD cases in Liberia as of December 31;
• 3423 deaths;
• 369 case and 179 deaths among health workers;
• 20000 Liberians projected to have died per month
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Ebola Shock
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Donor Response Mobilized Significant Resources FY 15 - IDA Program Adjustment I
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Post Ebola Recovery
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Government’s Economic Stabilization and Recovery Plan
• defines appropriate policies and strategies aimed at stabilizing and stimulating the economy;
• consistent with the goals and aspirations of Liberia’s AfT;• highlights strategic areas of investments that have the
greatest potential of bringing about economic stabilization and recovery in the shortest time possible;
• Focuses on: (i) growth recovery back to at least 6 percent by 2017; (ii) rebuilding a more robust health system (US$438.8 million) about a third of the cost of the overall plan of US$1.3 billion
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Post Ebola Recovery
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Challenging Environment to Deliver ESRP
• Slow recovery from the Ebola crisis• Elections scheduled for 2017• UNMIL drawdown plans• Low commodity prices continue • Increase in Liberia’s debt distress limits
borrowing• Poverty remains high – 54. 1 percent
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Post Ebola Recovery
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Recovery and Development - IDA Program Adjustment
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Post Ebola Recovery
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WB Portfolio in Liberia
• 14 active national IDA projects with over US$ 450 million commitment
• Four regional IDA projects with almost US$ 200 million commitment
• Significant grant funding to supplement IDA resources –over US$ 300 million
• Largest share of portfolio supports Economic Transformation pillar of the AfT – 70 percent
• Increasing share of health operations in portfolio
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Post Ebola Recovery
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New Projects Approved This FY:
• Youth Opportunities Program
• Urban Water and Sanitation Project
• Liberia Social Safety Nets Project
• Liberia Forest Sector Project
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Forest Sector Program
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The Forest Sector in Liberia:• 4.33 million Ha (45% of total land);• Rich in biodiversity: 43% of the remaining Upper Guinea
Rainforest;• One of 35 global biodiversity hotspots; • Forest sector contribution to GDP: 15.2% (2012) (1.2 for
Sub-Saharan Africa; 0.7% in North America);• Forest resources are critical for local economies and forest
communities;• Main threats to forests: expansion of large scale agricultural,
mining and logging concessions, unmanaged use of forest resources
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Forest Sector Program
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Evolving Legal Framework:
• Land Rights Policy (2013): recognition of customary land right at center of land policy wide approval;
• Land Rights Act (2014) under discussion by Parliament;• Land Commission to evolve into Liberia Land Authority;• Forest sector as the main provider to recognize and secure
collective rights over forest lands;• More than 120 requests to initiate a Community Forestry
Management Agreement (includes demarcation) received. Estimated demand: 500 to 1000 communities.
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Forest Sector Program
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Recent Developments:
• Involvement in the Forest Carbon Partnership Facility to develop a national strategy to reduce carbon emissions from deforestation and forest degradation (REDD+) (2012).
• Liberia Norway Partnership (2014). Supports the national REDD+ Strategy, Sustainable Landscape Management (community forestry, agriculture, conservation, restoration).
• The Liberia Forest Sector Program (2016)
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Forest Sector Program
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Liberia Forest Sector Projects aims at providing support to local communities and their organizations to improve the sustainable management and conservation of natural resources and improve the economic and social benefits
they obtain from them
• Improved Land Use Planning • Strengthen Management of Protected Areas• Support for Community Forests• Public-Private Partnerships to Strengthen Sustainable
Agriculture Development
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Natural Resource Management
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Citizen Engagement in Liberia’s Natural Resource Concessions: improving equity and mitigating conflict
• focuses on concession agreements that grant large tracts of land for purposes of commercial development and extraction of natural resources;
• Broader economic downturn significantly affected Liberia’s concession sector resulting in delayed production and layoffs;
• Along these challenges, there is arising number of incidents of unrest, vandalism and theft
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Natural Resource Management
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Research Findings:
• Initially, citizens are overwhelmingly in favor of investment, but this quickly gives way to frustration and grievance in light of unmet expectations and negative impacts;
• Processes of citizen engagement are largely ad hoc, inadequate and undermined by competing and vested interests;
• Citizens are engaging a variety of strategies to seek redress, which has produced mostly unsatisfactory results and what is seen to be a heavy handed response on the part of government;
• There are signs that citizens, investors and government are starting to value more systematic and constructive citizen engagement strategies and are experimenting with innovative approaches.
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Natural Resource Management
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“As a citizen of Bestnewlu, Sinoe County stated about the prospects of an agricultural concession in his area: “We are happy. We are still in the darkness. We want light to come. We wish the company will arrive soon.”
“[Company] helped to build a school in XXX – but the school is substandard. They used that school to exploit us. The school was built through an agreement with the town and [Company] – the town provided the majority of materials. Citizens made 45,000 dirt bricks for the structure, they provided sand and did most of the work. The company gave the zinc, cement and paid for the workmanship….when the school opened, [company] paid the teachers for the first three months and then stopped payments. Students stopped going to school and the school “died down”