Towards Inclusive Growth and

Economic Diversification

Hon. Boima Kamara Minister of Finance & Development Planning

November 22, 2016

Economic Outlook: Current Crisis in Context

Economic Diversification: Adopting Export-Driven Industrial Policy for the 21st Century

Revisiting the Agenda for Transformation: Investing in Infrastructure for Trade Facilitation & Job Creation

Current Crisis in Context

•Created fiscal space by removing external debt burden of $4.9 billion through the HIPC process

• Increased domestic revenue from $80 million to a peak of $470 million in 2014, and mobilized substantial support to invest in trade facilitation infrastructure

•Dismantled trade barriers through ongoing reforms, contributing to an average annual growth rate of over 7.5% prior to the EVD Outbreak

Sources: Ministry of Finance and Development Planning

5.9%

6.8%7.2%

8.2%

12.7%

6.0%

5.1%

6.1%

7.4%

8.2%8.7%

0.7%0.3%

-0.5%

3.2%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Liberia Real GDP growth

Fuel crisis

Path of sustained growth on way to double digit growth

Ebola – back to freefall

Source: MFDP, IMF (revised October 2016)

-6.00

-4.00

-2.00

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Comparative Medium Term Outlook- % Real GDP Growth

World Advanced economies ASEAN-5

Sub-Saharan Africa Liberia

Source: MFDP, IMF (revised October 2016)

8.23

12.72

5.975.09

6.097.43

8.25 8.66

5.906.80 7.20

8.23

12.72

5.975.09

6.097.43

8.25 8.66

0.690.02

2.46

4.735.41

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Percent of Real GDP Growth

(2006-2018)

Pre-Shocks Period Post -Shocks Period

Analysis of 2016 half-year activities points to more agricultureactivities driven by increases in rice and cassava production

• Filling output gap requires diversification

• Agriculture and manufacturing sectors can provide best alternatives

Impact of Ebola Virus Disease

Price decline for key exports: Iron ore, rubber, gold, etc.

UNMIL Drawdown is peculiar to Liberia

-25.00

-20.00

-15.00

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Percent of Real GDP Growth

Liberia Ivory Coast Ghana

Guinea Nigeria Sierra Leone

Source: MFDP, IMF (July 2016)

0%

10%

20%

30%

40%

50%

60%

70%

80%

0 100 200 300 400 500 600

Sources: IMF, Government of Liberia, Labour Force Survey (2010)

Agriculture

Commerce

Mining & Utilities

Construction

GovernmentTransport

Manufacturing

Number of workers, thousands

Avera

ge a

nnual G

DP g

row

th 2

00

5-2

01

3

Few Workers Many workers

Low Growth

High Growth

Liberia GDP per Capita vs Lower Middle Income Status Threshold

Growth in Liberia has long been driven by mining sector…

Mining driving Growth, but not creating jobs:

• Agriculture only grew 2.8%, but accounts for about 50% of workforce.

• Manufacturing, which is also labour-intensive, only grew 3.6%.

Source: Indexmundi, World Commodity Prices 2015

-0.25

-0.20

-0.15

-0.10

-0.05

0.00

0.05

0.10

0.15

Iron

Ore

Ru

bbe

r

Cru

de O

il

Co

al

Gold

Co

ppe

r

Co

tton

Co

ffee

Tea

Na

tura

l G

as

Co

co

a

Perc

en

t ch

an

ge s

ince J

an

uary

2013

Global price declines have accelerated focus on value addition at home

Diversification away from extractive commodities is needed

Source: MFDP, LRA

-

10,000

20,000

30,000

40,000

50,000

60,000

Q1 Q2 Q3 Q4

Trade Tax in '000 USD' Chart

TR tax

2014TR tax

2015

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Q1 Q2 Q3 Q4

Gross Trade Value in '000 USD'

Gross Trade 2014 Gross Trade 2015

Gross Trade 2016

Adopting Export-Driven

Industrial Policy for the 21st Century

Operationalize LATA

•Support value addition in

agriculture (through

financing, public goods,

market access)

•Strategic investment, both

domestic & foreign, in value

chains + downstream

processed goods

Support Manufacturing

•Expand electricity

distribution

•Link creative financing for

MSMEs + commercially-

viable businesses

•Attract more FDI in

manufacturing

Invest in Infrastructure:Link farmers to the final consumer + Connecting businesses to the grid

The LATA aims to develop priority agricultural value chains through private sector investment, innovative financing, adoption of an export-oriented industrial policy and enabling business environment. The following deliverables are sought by Dec 2017:

Rubber: Rubber Development Fund, 3 RSS Clusters, Operational, Access to new markets

Cocoa: LACRA Act passed, foreign value chain investor, access to inputs & extension services for smallholder farmers

Oil Palm: Outgrower scheme pilot, processing mills operational, Exports of Oil Palm, Non-concessionary production & marketing increased

Strategic level. Program formulated, budget available. eRegistration of farmers. Cost sharing mechanism. Financing facility for coops and agribusinesses. Warehouse Receipt System . Business Dev’t services. Agro-dealer network. Regulatory reforms. Quality control

Rice: Increased yields & access to market; Cost of production reduced; Private sector investment; Export markets explored

Fish: Robertsport & Mesurado fishing facilities operational, tax & regulatory reform, bankable aquaculture projects

Cassava: High quality cassava flour used in bread, starch production

Poultry/Livestock: Investor in feed production, backyard poultry rearing project

08/24/2016 15

Rubber RubberwoodRibbed Smoked Sheets

Household UtensilsShoes

Oil Palm Cooking OilSoaps

Biomass fuelFeed

Cocoa Grade A CocoaCocoa Butter

CosmeticsChocolate

Fish Fresh/driedFillets

CanningFish Sauce

Cassava High Quality FlourChips

StarchesGari

Rice CerealsFeed

Rice OilNoodles

1. Identify those able to play pivotal roles along the value chain

2. Provide enabling factors

3. Address bottlenecks inhibiting growth

Business Support Services

Foreign Markets

Exporters

Processors

Aggregators/Traders

Agriculture Production

Inputs to Production

Components of Functioning Market System Enabling Gov’t Support

SPS, VoC & standard compliance / infrastructure

Clear Regulatory Frameworks

Facilitation through Signature Listings / agri-infrastructure / Investment promotion

Improved Agri - Infrastructure

Farmer & Agro-Dealer Registration / Access to Finance / Research

Duty-free critical inputs

Domestic Markets

Local Wholesalers

Creating a Sustainable Market System relies on both public & private sectors

Investing in Infrastructure for

Trade Facilitation & Job Creation

Sector Strategies and Plans

Informed by various studies and diagnostics Incorporates issues of equality and inclusion

Five Year Development Plan (Agenda for Transformation)

Inclusive Economic Growth Participatory Socio-Political Development

National Vision (Liberia RISING 2030)

Broad national aspiration to be achieved by 2030

FU

TU

RE

CO

RR

IDO

RS

of pavement completed or scheduled to be completed by 2017732 km

of on-going works in late 2017 (incl. urban roads),

278 km

of unpaved roads with finalized feasibility study (by 2017 latest) & financing

168 km

700+ km with available or on-going feasibility studies by 2017

MONROVIA

Mt. Coffee Hydro Plant

Monrovia Consolidation

RIA Corridor

Bomi Corridor

Cote d’Ivoire, Liberia, Sierra Leone, Guinea

(CLSG) Project

Kakata Corridor

India ExIm (Ganta,

Gbarnga, Zorzor)

HFO 3HFO 2

Source: Presidents Delivery Unit

More affordable and reliable electricity coming online to reduce cost of doing business…

MONROVIAPorts of Buchanan &

GreenvilleUpgrade of Equipment

Freeport of Monrovia Fuel Unloading FacilityMesurado Fishing Pier

Roberts International Airport

Airport Terminal ConstructionRunway Upgrade

… & the rebuilding of ports will further facilitate domestic & regional trade by 2017

Source: Presidents Delivery Unit

AGRICULTURE BUILDINGS

• Samuel KanyonDoe (SKD) Sports Complex

• Ministerial Complex

• Capitol Building Annex

•Liberia Agricultural Transformation Agenda

MANUFACTURING WATER & SANITATION

• Monrovia Industrial Park

• Special Economic Zone (SEZ)

• White Plains Rehabilitation Plant

• Three Towns Water & Sewage

GoL is also investing in hard & soft infrastructure to facilitate service delivery

Source: Presidents Delivery Unit

Transforming Liberia Together