Situated in northeast Africa, Liberia is Africa's oldest republic founded in 1822 by the American Colonization Society as a place to repatriate freed American slaves, official independence took place in July 1847 by black Americans. There is a long history of United States involvement within Liberia as many English names within Liberia are named after America including the capital Monrovia after former US President James Monroe. At present, the US-dollar ('USD') is legal tender as Liberia currently follows a bimonetary currency system of the USD and the Liberian dollar ('LRD'). And more recently in August 2003 when Liberia sank to complete chaos, American military forces came to the rescue landing in Liberia. The Americans along with UN peacekeepers provided military support to ensure a somewhat peaceful transition from the then warlord government of Charles Taylor's brutal regime to a new United Nation's power sharing agreement reached with oppostion political representatives.
Today, Liberia is filled with violence, chaos, the country has been looted including missing foreign aid, homelessness, economic decimation with over 80 percent living below the poverty line and an infrastructure that has been demolished. The country has fallen into virtual anarchy as it has been destroyed over the last two decades by the nation's on-going civil war. One of the most devastating consequences of this collapse of the nation state for the last 23 years is the export of Liberia's brightest individuals & entrepreneurs as many businesses have left forever taking valuable knowledge and capital elsewhere. This will take years to replenish. And even at time of currency review in December 2003, street battles still continue today in Monrovia. Much of this economic and political turmoil can be traced to the mismanagement of former Liberian President Charles Taylor when he appeared on the political scene in 1989 although Liberia was also brutally governed by a different regime during the 1980's. The net result has been a devastating civil war from 1990-97 and from 2000-03 which has killed over 250,000 people for this war-torn country and uprooted another 1.3 million from their homes.
POLITICS: President Gyude Bryant took over power on October 14, 2003 after former President Charles Taylor was forced out of power by international pressure for his role in destabilizing Liberia and much of West Africa. President Bryant is head of a transitional government after a UN-brokered cease fire among Liberian rebels grouped under the title of Liberians United for Reconciliation and Democracy (LURD) and the Liberian government headed by former President Charles Taylor was achieved on August 18, 2003. With the peace initiative, international peacekeeping forces within Liberia are expected to reach 15,000 with the majority of forces from Nigeria. Further, the US government has pledged $450 million USD in foreign aid to help Liberia stabilize. From 1980, Liberia has had a history of violent coups, political mismanagement & corruption and political instability that has dominated this small nation. During President Bryant's inaugural address, he vowed to clamp down on the greed, corruption and bribes that have plagued Liberia.
During fall 2003 after former President Taylor left office, millions of Liberian dollars have appeared on the market as many suggest that Taylor is still attempting to influence the economy by dumping LRD exchanging for USD. It has been documented that warlord Taylor's regime had flagrant corruption within his government and many observers in the press have allegedly stated that Taylor stole millions from the government while he was in power by diverting government funds and selling assets for self-interest. Taylor is well known for the smuggling of blood diamonds from Sierra Leone for export through Liberia valued upward of $125 million USD/year for which Taylor used to help finance his 14 year insurgency within Liberia from 1989-2003. At the same time, Taylor's regime was providing arms for Sierra Leone's Revolutionary United Front (RUF). Taylor was officially elected to the Presidency not until 1997 but was a major player in the affairs in Liberia since 1989. Taylor who is now exiled in Nigeria may face war crimes and Nigeria has agreed to let Taylor face these charges if placed. Former President Taylor's track record is indeed dicey spending time in a US prison where he escaped, allegedly stole $1 billion from the Liberian treasury, destabilized much of West Africa. According to Canada's National Post, Taylor who is wanted for war crimes may have possibly upwards of $3.8 billion USD in Swiss banks representing the monies he earned from from smuggling blood diamonds, illegal arms deals, ravaging the Liberian rainforests for timber harvesting, looting the national treasury, etc.
ECONOMY: criminalized open economy, despair, terrible economic conditions with an infrastructure that is basically destroyed. The Liberian economy today is only 50 percent of its pre-civil war level in 1988 when it had a then market GDP of $1 billion USD, a significant improvement from 1997 when Liberia's economic output was officially only at 10 percent of its pre-war level. Along with the economic calamity the civil war has brought, the international community imposed UN economic sanctions on Charles Taylor's regime coupled with an arms embargo in May 2001. Rebuilding the infrastructure is a necessity as many areas of Liberia have no running water or electricity since 1990. Majority of revenues derived for Liberia'g government include a successful maritime registry that is worth upwards of $20 million USD/year for 1,400 ships registered for international clients along with customs duties and forestry exports. One of the country's largest employers is the government with 45,000 in the civil service at an annual cost of $18 million USD. Liberia has a long history of rubber plantations used for export for the car industry. Industry segments include forestry, agriculture (ie. palm oil, cocoa, sugar cane, bananas, etc.), fishing, rubber processing, diamonds, mining and manufacturing. Liberia has no petroleum production as of yet but there is exploration potential. In order to continue with a sustained economic recovery, Liberia needs increased donor aid and foreign direct investment.
GDP as measured by purchasing power parity is at $3.1 billion USD (2002) with corresponding GDP/Capita at $1,000 USD (2002). GDP as measured by market prices is at $564 million USD (2002) with real GDP/Capita at only $185 USD (2002) which is one of the world's lowest figures. GDP/Capita remains at 30 percent of its 1989 pre-war level. GDP growth for year 2002 at 4.2 percent, 2001 at 5.3 percent after a strong rebound from the end of the civil war in 1997 with GDP growth averaging 20 percent for both year 1999 and 2000. Inflation for year 1999 at 2 percent, 2000 at 4 percent, 2001 at 12.4 percent, year 2002 average at 14 percent, March 2002 inflation at 20 percent. The trade deficit is at 5 percent of GDP. Year 2002 current account deficit at 5.1 percent of GDP including donations, 2001 shortfall at 16 percent, 1999 at 29 percent. Exports in 1988 were measured at $440 million USD, 1997 exports for comparison only at $25 million USD. Massive national debt in relation to the size of the economy at $3 billion USD (2003) or about 500 percent Liberia's GDP with much of the debt in the arrears. Foreign direct investment 'FDI' for year 2001 was only $12.5 million USD. Agriculture is measured at 75 percent of economic output. Unemployment is estimated at 70 percent. Germany is Liberia's largest export market while South Korea is the largest import provider.
POSITIVE: consumer goods are available for those with money, some humanitarian & donor aid, strong demand for rice & rubber exports, English is the official language which helps for commerce, import duties are no higher than 10 percent. CONCERN: high infant mortality rate with average life expectancy of only 48 years, large number of squatters, literacy is fair at 57 percent, deforestation of tropical rain forests, environmental challenges include water quality & raw sewage disposal, AIDS is at 10 percent of the adult population, major drug transshipment centre for Asian heroin & cocaine from South America, basic telecommunication system.
BANKING SYSTEM: weak. The banking system consists of 4 commercial banks plus the Central Bank of Liberia established in 1974 which itself has had difficulties with alleged corruption. Many goods are priced in US-dollars. Surprisingly, Lebanese traders based in Liberia control the commerce within Liberia. Low foreign exchange reserves perhaps at only $1 to 2 million, basically empty in the national treasury.
REGIONAL ANALYSIS: Sierra Leone, Guinea, Ivory Coast
The region is basically the center of one large war zone. Liberia has supported rebel insurgencies in Sierra Leone when former Liberian President Taylor was in power. Many in the international community believe that former President Taylor was responsible for much of the instability in northwest Africa, hence their strong support for his removal.. There is a history of tensions within both Sierra Leone and Guinea, interesting to note that both of these countries currently are home to tens of thousands of Liberian refugees displaced from conflict since 1989 within Liberia. Instability has taken hold in the Ivory Coast over the last year with political uprisings.
KNOWLEDGE: amongst all this conflict and economic devestation, Liberia does indeed have great potential as it is blessed with rich natural resources and beautiful scenery. If peace can be sustained, Liberia might be able to build upon a lucrative tourism industry with its great beaches and return to its pre year 1980 glory. Amongst its resources, Liberia has untapped reserves for natural gas and crude oil. Liberia has huge potential in the development of mining. Liberia is home to several rare earth metals and minerals including uranium deposits, copper, barite, garnet, zinc, lead, zircon, topaz, beryl, phosphate to name a handful. Gold and rubber have and will be an important industry for Liberia to continue to capitalize on. Liberia's iron ore reserves are estimated at an impressive 4 billion tonnes. Other areas include diamonds, timber, hydropower, fresh water plus Liberia has an ideal climate for agricultural. Its geography provides for wonderful economic opportunities. In the 1960's-70's, Liberia was active in mineral development which then provided good cash flow as prosperity took hold. During the civil war of the 1990's, mining was dormant.
CURRENCY: ISO Symbol ' LRD', Liberian dollar. At time of review on December 18, 2003, the Liberian dollar had an official exchange value of par (1.0) to the US-dollar ('USD') which has been in place since 1940. However, the market rate for Liberian dollars differs tremendously from the official rate. From 2001-02, the market rate for the Liberian dollar fell 34 percent to the USD with rising inflation pressures. US notes and coins are legal tender in Liberia.
CURRENCY HISTORY: historical market exchange valuations for Liberia include January 1992 at 7 LRD to 1 USD, year 1998 at 41, 1999 at 42, April 2000 at 42.5, April 2001 at 47, November 2001 at 62 with economic sanctions, year-end 2002 at 65 to the USD, spring/summer 2003 when former President Taylor still in power the market exchange was in the range of 50 LRD to 1 USD reflecting a modest appreciation from Fall 2002 due to USD global weakness. From 1998-2000, the exchange rate for the Liberian dollar was surprisingly quite stable.
CURRENCY FORECAST: bullish over the very long term only if sustained peace and stability returns as Liberia can then capitalize on development of its rich natural resources in the upcoming commodities boom. Sustained security both domestically and with Liberia's neighbors will largely determine the market value going forward for the LRD. Exchange stability is quite attainable with a new responsible government and a return to peace in the region. There has also been discussion's for a new regional currency that may evolve in the years ahead. In April 2000, the West African nations of Ghana, Nigeria, Liberia, Sierra Leone, Gambia, Guinea signed an agreement to share a common currency perhaps by 2010? A currency block will be beneficial to these countries as the world moves toward regional currency unions including CFA franc, Euroland euro, Mercusor region in South America, Asian currency alliances and North America.
UPDATED: December 18, 2003