HomeReportsBureau of Economic and Business Affairs2018 Investment Climate Statements…Liberia

# 					2018 Investment Climate Statements: Liberia			

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													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Liberia has a free market system and the government encourages foreign direct investment (FDI) in the economy. However, there is an ongoing legislative debate over draft legislation intended to expand on the “Liberianization” Act of 1973 and the Investment Act of 2010 by further restricting foreign investment in certain sectors. The economy runs on a free-floating exchange regime with both the Liberian and United States dollar used as legal tenders. The National Investment Commission (NIC) is the investment promotion agency responsible for crafting policies and designing programs for improving Liberia’s investment climate. In 2016, the World Bank reported Liberia’s Gross Domestic Product (GDP) at USD 2.101 billion and its per capita Gross National Income (GNI) as USD 370 (https://data.worldbank.org/country/liberia). The IMF has projected Liberia’s real GDP growth for 2018 at 4 percent with an average inflation rate of 9.9 percent (http://www.imf.org/en/Countries/LBR). In 2016, the United States’ FDI in Liberia was USD 1 billion and Liberia’s FDI in the United States was USD 461 million (https://www.bea.gov/international/factsheet/factsheet.cfm).

Foreign investments are regulated by the 2010 Investment Act, the Revenue Code, the Public Procurement and Concessions Act, and relevant regulations such as the National Competitive Bidding Regulations. The 2010 Investment Act guarantees foreign investors the right to transfer profits outside Liberia and it provides protection against expropriation, unlawful seizure, or nationalization. Although the government continues to improve the business regulatory environment by reducing the steps and time required to start a business, Liberia lags in many important measures such as contract enforcement. The World Bank’s 2017 Doing Business Survey ranked Liberia 172 out of 190 countries for ease of doing business, with a score of 43.55/100. For concessions or long-term investment contracts, potential investors often engage in lengthy bidding and negotiation processes. There is an ad hoc cabinet level Inter-Ministerial Concessions Committee (IMCC), which negotiates concession agreements before they are ratified by the legislature and signed by the president to become law.

The government seeks to strengthen institutions and make reforms to improve the investment climate. However, progress in creating an attractive business-friendly environment is hampered by a weak regulatory environment, corruption, lack of transparency, poor infrastructure, and low private sector capacity. In 2017, Transparency International’s corruption perception index (CPI) ranked Liberia at 122th out of 180 countries with a score of 31/100. Sectors that have historically attracted significant investment include iron ore, gold, rubber, palm oil, timber, banking, and telecommunications. Liberia’s main trading partners are the United States, China, India, the European Union (EU), and Côte d’Ivoire. Currently, the export sector is driven by rubber, iron ore, and gold, which together account for about 80 percent of 2017 total exports. (*Central Bank of Liberia, 2017 Annaul Report, https://www.cbl.org.lr/2content.php?sub=155&related=29&third=155&pg=sp*) The best prospect sectors for U.S. investment are agribusiness, manufacturing, transportation, storage and warehousing facilities, energy, construction, real estate, and financial services. Key issues of concern are difficult and opaque procedures for obtaining clear title to property, lack of adequate legal protection for contracts, limited awareness of intellectual property rights (IPRs), pervasive corruption, and poor physical infrastructure.

*Table 1*