A new report by the World Bank, titled “Escaping the Natural Resource Trap: Pathways to Sustainable Growth and Economic Diversification in Liberia,” underscores the urgent need for significant institutional and policy reforms to revitalize Liberia’s economy.
The Liberia Country Economic Memorandum provides a comprehensive analysis of the nation’s economic outlook, highlighting its vulnerability to external shocks that have stunted sustainable growth. The report reveals that Liberia’s heavy reliance on a narrow, commodity-based development model has led to recurring cycles of stagnation and recovery.
According to the findings, a “business-as-usual” approach will yield only modest growth, insufficient for Liberia to attain middle-income status by 2030 or significantly reduce poverty levels. The report projects that the country will not meet the middle-income threshold of US$1,000 until approximately 2050.
To foster long-term development, the report emphasizes the necessity of institutional and policy reforms aimed at modernizing the public sector. These reforms, aligned with the goals of the ARREST Agenda for Inclusive Development (AAID), should focus on:
– Overhauling the business climate to encourage private investment
– Enhancing the quality of public services, particularly in education and healthcare
– Increasing the efficiency and scale of public investments in infrastructure, including power, roads, and digitalization
The report outlines five transformative strategies for Liberia, including reducing dependence on mining, recognizing the private sector as a key driver of economic growth, and implementing comprehensive public sector reforms.
The World Bank suggests that with ambitious and credible reforms, Liberia could see substantial medium- to long-term improvements. A robust reform program could potentially double annual productivity growth in the non-mining sector, enhance education and health outcomes, and stimulate real GDP growth. With such changes, Liberia could achieve lower middle-income status before 2040 and reach a real per capita GDP of US$2,000 by 2050.
As Liberia stands at a pivotal moment, the call for reform offers a pathway to a more resilient and diversified economy.
