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Liberia improves in economic opportunity but still tax mobilization, infrastructure, and business environment struggle to see gains

Summary:
By Tamara WhiteGood governance—according to the Mo Ibrahim Foundation, the provision of political, social and economic public goods and services that every citizen has the right to expect from their government—has been more crucial than ever before due to the COVID-19 pandemic. Indeed, good governance has been vital in ensuring that citizens are protected from any devastating impacts. It includes aspects of citizens’ participation, rights and inclusion, security and rule of law, human development, and economic opportunity. To more deeply delve into these issues, on August 26, Brookings Africa Growth Initiative Senior Fellow and Director Aloysius Uche Ordu joined Jeanine Cooper, Liberia’s minister of agriculture; Bioma S. Kamara,  former minister of finance; Mawine G. Diggs, Liberia’s

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By Tamara White

Good governance—according to the Mo Ibrahim Foundation, the provision of political, social and economic public goods and services that every citizen has the right to expect from their government—has been more crucial than ever before due to the COVID-19 pandemic. Indeed, good governance has been vital in ensuring that citizens are protected from any devastating impacts. It includes aspects of citizens’ participation, rights and inclusion, security and rule of law, human development, and economic opportunity.

To more deeply delve into these issues, on August 26, Brookings Africa Growth Initiative Senior Fellow and Director Aloysius Uche Ordu joined Jeanine Cooper, Liberia’s minister of agriculture; Bioma S. Kamara,  former minister of finance; Mawine G. Diggs, Liberia’s minister of commerce and industry, and Monie R. Captan, chairman of the board of directors at the Liberia Electricity Corporation for a conversation on trends in Liberia’s governance record utilizing the Mo Ibrahim Foundation’s Ibrahim Index of African Governance (IIAG). The discussion, one of many panels, was co-hosted by the Mo Ibrahim Foundation and the Ellen Johnson Sirleaf Presidential Center for Women and Development.

While the event featured many panels, including on human development and security and rule of law, Ordu moderated the panel on “Foundations for Economic Opportunity”—Liberia’s most-improved category in this year’s IIAG. Despite this progress, as the panelists discussed, Liberia ranks second-lowest in the IIAG “trade environment” and has room for improvement in several other related indicators. As such, Ordu led the expert panel in a discussion of Liberia’s improvements in its rankings as well as barriers to success for the country in enhancing economic opportunity. The main points of the discussion included:

Public administration. According to the United Nations, good governance, supported by strong public administration, is the heart of sustainable development. This year, Liberia made substantial strides in the “public administration” category of the IIAG, most notably in civil registration, Liberia was able to improve its civil registration score by 37.5 points from 2010 to 2019, owing largely to an increase in birth registrations. Birth registration is important because it gives children a legal identity, which enables their access to their fundamental rights as citizens.

Liberia still has a long way to go in other areas of public administration, though, as the panelists noted. In fact, tax and domestic revenue mobilization was a central theme of the panel discussion, as the  country’s score in this area declined precipitously between 2010 and 2019. Importantly, the World Bank recommends that, to effectively deliver sustainable and equitable growth, all countries should raise tax revenue equivalent or higher than 30 percent their GDP. In 2013, Liberia was reported at about 13 percent—showing urgent need for improvement. Panelists recommended a number of interventions including, making commitments to infrastructure, increasing public sector projects, and finding ways to collect taxes more efficiently.

Business environment. Overall, Liberia’s performance also dropped in the category of “business environment.” More specifically, according to the IIAG, the country received high marks in regional integration but still suffers from onerous business regulations. For example, according to the World Bank’s Doing Business Report, bureaucratic compliance for trading across borders in Liberia takes an average of 193 hours to complete. Improving efficiency in compliance at its border is an important step in improving the ease of doing business in the country. Panelists agreed that border compliance is an issue and stated that Liberia needs to move into a digital space to fix this issue. With the processes at the border still being done manually, delays are inevitable, and compliance will continue to be a barrier for the country.

Infrastructure. Like in many sub-Saharan African countries, poor infrastructure in Liberia inhibits economic growth. Given the importance of technology for modern economic growth, the panel extensively discussed electricity access, reliability, and cost. Notably, Liberia has one of the lowest rates of electricity access in the world as well as some of the highest electricity tariffs, at $0.54 per kWh. Liberia also struggles with power theft rates of 55 percent, which are also the highest in the region. Power theft, defined by the Power Theft Act, is the tampering with meters, transmission and distribution lines, and general theft of meters, light poles, wires, and transformers. Indeed, a press conference in August of this year revealed that the Liberia Electricity Corporation (LEC) had lost $220 million to technical losses, commercial losses, and unpaid bills from this issue. Panelists were optimistic regarding the country’s ability to improve access and cost, though, arguing that the new Electricity Law of Liberia can better enable the country to build and regulate the electricity sector more efficiently.

Rural sector. Importantly, while Liberia’s performance in the rural sector (e.g., rural market access and rural sector support) improved since the last report, the panelists were keen to note how closely infrastructure and the rural sector are intertwined. With customary land ownership denied in some rural areas until the implementation of the 2018 Land Rights Act—which empowered rural communities by strengthening of rights of local, customary landowners—these communities suffered tremendously. According to one panelist, because 80 percent of the country’s citizens participate in agriculture in some way, this act has been a “game changer” for the rural sector. Panelists also noted that there have been uptakes in rural sector support as part of wider efforts to boost the rural economy through commercialization.

Gender equality. Another important aspect of the conversation was the role and rights of women, especially in rural areas. Indeed, one panelist noted that women do not have the same access to land as men in the country, despite about 70 percent of rural work being done by women. To truly strengthen the rural sector, the panel agreed, gender equality must be at the forefront of conversation, and women must be able to have autonomy over their own land.

Madame Ellen Johnson Sirleaf, former president of Liberia and founder of the Ellen Johnson Sirleaf Presidential Center for Women and Development, closed the full event by emphasizing the importance of good governance in bolstering economic development and inclusive growth as well as improving the livelihoods of all.

Liberia improves in economic opportunity but still tax mobilization, infrastructure, and business environment struggle to see gains
Liberia improves in economic opportunity but still tax mobilization, infrastructure, and business environment struggle to see gains Liberia improves in economic opportunity but still tax mobilization, infrastructure, and business environment struggle to see gains Liberia improves in economic opportunity but still tax mobilization, infrastructure, and business environment struggle to see gains Liberia improves in economic opportunity but still tax mobilization, infrastructure, and business environment struggle to see gains Liberia improves in economic opportunity but still tax mobilization, infrastructure, and business environment struggle to see gains  

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