Liberia

IV

Economy

Years of civil strife have destroyed much of Liberia’s economic infrastructure, have made civil administration nearly impossible, and have brought economic activity virtually to a halt. The deterioration of economic conditions has been greatly exacerbated by the flight of most business people with their expertise and capital. Resumption of hostilities in 1993 and 1996 brought efforts at economic recovery and repatriation of some 750,000 Liberian refugees who have fled to neighbouring countries to a virtual halt. Inflation and unemployment remain extremely high, and the country is largely dependent on relief aid. Recovery depends on the re-establishment of a stable central government.

Before the civil war, Liberia encouraged foreign investment in the development of its rich natural resources, mainly rubber, iron ore, and timber. The huge Harbel rubber plantation owned by the American company Firestone was the largest employer in the country after the government until the mid-1980s. Many hundreds of civilian workers were killed there by rebel forces in 1993. More than 65 per cent of Liberia’s labour force was engaged in mainly subsistence agriculture, fishing, and forestry.

The government implemented educational and vocational training programmes in order to develop the skills of the people, but financial mismanagement, poor international commodity prices, and rising debt had led to an economic crisis even before the outbreak of civil war. Since 1990, with the collapse of the formal economy, subsistence production has struggled to re-emerge with great difficulty. In 1992 the country’s gross national product was US$973 million (World Bank estimate; 1990-1992 prices), equivalent to US$354 per capita. In 1994 the annual budget showed revenues of US$225 million and current expenditures of US$285 million.

A

Agriculture, Forestry, and Fishing

Rice, sugar cane, and cassava (manioc) are the main traditional food crops of Liberia; the country must import rice to meet its needs. The major export crops were coffee and cacao. Fruits, vegetables, and sweet potatoes are normally grown for local consumption. In 2005 production included, in tonnes, cassava (490,000), sugar cane (255,000), and rice (110,000).

Oil palm kernels, from which an oil for soaps is extracted, and palm fibres are important forest products. However, the most important forest industry, and the one on which Liberia’s modern economy was first built, is the production of rubber. In the mid-1980s the Firestone and smaller plantations covered 66,800 hectares (165,000 acres) and produced about 85,000 tonnes of rubber a year. By 1994 rubber production had declined to 10,000 tonnes, but rose to 31,000 tonnes in 1995. Commercial deep-water fishing was expanding before the war; compared with an annual catch of about 18,700 tonnes in the late 1980s, which included sole, lobster, crayfish, shrimp, and crab, by 2004 the total catch had declined to 10,359 tonnes.

B

Mining

In the early 1960s the mining of iron ore replaced the production of rubber as the principal industry. Liberia has large reserves of rich iron ore and was a major world exporter of the commodity. Production in the late 1980s was about 18.9 million tonnes annually; by 1990 it was 2.4 million. In 1992 mining of iron ore ceased. Other commercially exploited minerals included small quantities of diamonds and gold.

C

Manufacturing

Liberia had few major manufacturing industries before 1989. Small-scale production, mainly foreign-owned, of food products, construction materials, and consumer products was carried on. The country is still struggling to recover from the effects of the civil war.

D

Currency and Banking

The monetary unit of Liberia is the Liberian dollar, currency at par (in theory) with the US dollar since 1940; the US dollar is also legal tender, and normally preferred in transactions. After the onset of the civil war different notes were in use in government- and rebel-held territory. In 2000 new currency notes were introduced in an attempt at unifying the monetary system. The National Bank of Liberia (established 1974) is the country's central bank.