iberia’s 14-year civil war left much of the country’s infrastructure shambles. The country’s 170 megawatt power generation capacity and national grid were completely destroyed. In Monrovia, L just 0.1 percent of households had access to electricity. According to the 2008 National Census, access to piped water fell from 15 percent of the population in 1986 to less than 3 percent in 2008. The national road network was left in severe disrepair.

Peace brought many positive developments. The Freeport of Monrovia is now privately managed and has resumed normal operations. Essential rehabilitation work has been carried out, and the port’s performance now matches that of neighboring ports along the West African coast. Liberia has also successfully liberalized its mobile telephone markets, with access surging to 40 percent in 2009, at some of the lowest prices in Africa.

But Liberia still faces critical infrastructure challenges. Perhaps the starkest lies in the power sector. The country’s installed power generation capacity is little more than 2 megawatts per million people, barely one-tenth of the benchmark level for other low-income countries in Africa. The cost of generating power is $0.77 per kilowatt-hour, exceptionally high by any standard. Furthermore, the power tariff of $0.43 per kilowatt-hour is about three times the average for Africa, which is already very high by global standards. Investment in more cost-effective power generation is therefore an important strategic objective for the country if electrification is to reach the wider population.

Although good progress has been made in securing donor finance for road reconstruction, existing capital spending is about half the level that would be required to complete the rehabilitation process within five years, and existing maintenance spending is about half what would be needed to preserve these new investments into the future. Many countries have addressed this problem by establishing road funds financed by user charges. That approach is being considered in Liberia.

Addressing Liberia’s public infrastructure needs will require sustained expenditure of between $350 million and $600 million per year, depending on the technologies and standards chosen. Power and transport account for the largest portion of this total—around one-third each.

When all sources of spending are taken into account, Liberia spent around $90 million a year on infrastructure in the mid-2000s. That is equivalent to about 10 percent of GDP, a relatively high share compared with other African countries though still only about half of the share that China has spent on infrastructure in recent years. About 80 percent of total infrastructure spending has been investment, and almost half has gone to the transport sector. Official development assistance is by far the largest source of investment, followed by private funds. Domestically financed public investment has been minimal. In addition, a total of $17 million is lost annually to inefficiencies, mainly because of the absence of road user charges and underpricing of power.

Assessing spending needs against existing spending and potential efficiency gains leaves an annual funding gap of between $250 and $500 million per year, most of it associated with power and transport. While the funding gap is very large relative to the economy, there are a number of options for making it more manageable. First, Liberia has established a strong track record in foreign direct investment: in recent years it has captured private investment for infrastructure (almost all for the ICT sector) equal to 2 percent of GDP. Power generation and ports may also be candidates for private finance. Several multinational companies have obtained concessions to exploit the country’s abundant mineral, forestry,