Liberia’s Economic Future: Reform or Stagnation? The Urgent Need for Transformation

Liberia’s economy remains stuck in cycles of stagnation due to overdependence on resource exports, weak infrastructure, and poor governance. Bold reforms in trade, investment, education, and governance are crucial for achieving sustainable growth and poverty reduction.

The World Bank’s 2025 Liberia Country Economic Memorandum (CEM), with input from the African Development Bank (AfDB), International Monetary Fund (IMF), and Liberia’s Ministry of Finance and Development Planning, provides a deep analysis of Liberia’s economy. Liberia is one of the poorest countries in the world, ranking 180th out of 190 in the World Bank’s development index. More than 60 percent of the population lives in poverty, and many people lack access to quality education and healthcare.

For decades, Liberia’s economy has gone through cycles of growth, decline, and stagnation. The country has faced serious economic shocks, including two civil wars, the 2014 Ebola outbreak, the withdrawal of UN peacekeepers in 2018, and the COVID-19 pandemic in 2020. These crises, combined with poor governance and dependence on a few industries, have prevented lasting economic growth. Since 2003, Liberia’s GDP per capita has barely improved, making it difficult to reduce poverty or create new job opportunities.

Too Dependent on Mining and Exports

Liberia’s economy relies heavily on iron ore, gold, rubber, and timber exports. This dependence makes it vulnerable to global price changes—when prices fall, the economy struggles. The country has not developed other industries like manufacturing, tourism, or large-scale agriculture, which could provide stable jobs.

A major economic shock came when UNMIL (United Nations Mission in Liberia) left the country. While UN peacekeepers were present, they spent money on housing, food, and services, which helped local businesses. Their departure reduced demand for many goods and services, further weakening the economy.

Liberia also has serious infrastructure problems. Roads are in poor condition, power supply is unreliable, and internet access is limited. These issues make it difficult for businesses to grow. Corruption, slow government processes, and weak enforcement of laws discourage investment. Without major improvements, the country will struggle to attract foreign businesses and create new industries.

Trade and Investment: A Missed Opportunity

Liberia used to trade more actively with the world, but in recent years, exports have fallen from over 40% of GDP to around 25%. The country mainly sells its goods to Europe, Switzerland, and China, while exports to the United States and other African countries have declined.

High transportation costs, slow port operations, and complicated customs procedures make it hard for businesses to trade efficiently. Liberia also imports more than it exports, meaning the country spends more on foreign goods than it earns from selling its own products.

According to the report, diversifying Liberia’s exports could strengthen the economy. For example, focusing on processed agricultural products like palm oil, rubber, cocoa, cassava, and rice could add value and create more jobs. Investing in better trade policies, reducing bureaucracy, and improving roads and ports would make it easier for businesses to export products.

Human Capital: The Need for Better Education and Healthcare

Liberia’s low levels of education and healthcare are holding back economic growth. The country scores 0.32 on the World Bank’s Human Capital Index, meaning that a child born today would only reach 32% of their potential productivity if conditions do not improve.

Many young people do not complete school, and the education system does not provide the skills needed for good jobs. At the same time, healthcare is poor, with high rates of malnutrition, child stunting, and preventable diseases. Without major investments in education and healthcare, Liberia’s workforce will remain unskilled, and economic progress will be slow.

The report recommends improving school quality, expanding vocational training, and increasing healthcare funding. If Liberia focuses on education and health improvements, it could create a more skilled workforce and attract businesses looking for trained employees.

Two Possible Futures: Stagnation or Growth?

The World Bank’s Long-Term Growth Model (LTGM) presents two possible paths for Liberia’s future:

1. The “Business-as-Usual” Scenario

   • If Liberia continues on its current path, GDP growth will average 5.5% per year until 2029, but slow to 4.5% after that.
   • The country will not reach lower-middle-income status before 2050.
   • Economic growth will remain slow because of weak investment, poor governance, and lack of industry diversification.

2. The “Reform” Scenario

   • If major economic reforms are made, Liberia could increase GDP growth by 3.3% per year.
   • The country could reach lower-middle-income status before 2040.
   • More investment in education, infrastructure, and private business would drive long-term economic transformation.

To achieve faster growth, Liberia must focus on reforms that boost productivity and investment. A stronger economy requires better trade policies, a stronger business climate, and smarter government spending.

The Way Forward: Key Reforms for a Stronger Liberia

The report suggests several steps to help Liberia escape its economic challenges and build a better future:

• Increase government revenue: Collect more taxes and reduce reliance on foreign aid.
• Combat corruption: Strengthen anti-corruption laws and improve government efficiency.
• Improve business conditions: Make registering, getting permits, and accessing financing easier for companies.
• Invest in education and healthcare: Focus on quality schools, teacher training, and medical services.
• Expand trade and exports: Reduce trade barriers and improve transportation networks.
• Strengthen infrastructure: Invest in roads, electricity, and internet connectivity to support businesses.
• Develop agriculture and processing industries: Move beyond raw exports to value-added products like processed rubber and palm oil.

A Critical Decision for Liberia’s Future

The next five years are crucial. Liberia must decide whether to continue on its current path or make bold reforms that can transform the economy. Without action, poverty will remain high, and economic growth will be slow.

However, if Liberia implements strong economic policies, fights corruption, and invests in its people, it can create a diverse and resilient economy. More jobs, better infrastructure, and a skilled workforce will help the country move toward long-term prosperity.