It says a lot about the sheer destruction caused by Liberia’s two civil wars that the West African country’s economic output, in real terms, is only now at the same level it was in 1989, the year the conflict first erupted.
Liberia, which has been at peace since 2003, remains one of the world’s least developed countries and its institutions and infrastructure are weak, even by sub-Saharan African standards.
But thanks to the work of officials such as Amara Konneh, a 41-year-old finance minister, Liberia’s $2bn economy is once again buoyant, growing 8.3% in 2012 and almost as much last year.
It has made impressive gains in other areas too, when between 2011 and 2013 it climbed eight places to 174 (out of 187) in the UN’s Human Development Index and has risen 10 positions in the World Bank’s last two Ease of Doing Business reports, taking it above Tanzania and Nigeria.
Much of this success has resulted from the government’s focus on developing its security services and attracting outside investment to revive industries that thrived before war struck.
“As a post-conflict country, a major part of our strategy in the past five years was to ensure that peace and security were sustained,” says Mr. Konneh. “Together with our development partners, we invested heavily in improving the national police services and the army.
“For the economy, the goal has been to resuscitate the traditional sectors, such as mining, forestry, rubber and palm oil.”
The efforts are paying off. Mining, which in 2006 accounted for just 2% of gross domestic product (GDP), now makes up 10% of the economy, thanks mainly to more than $1bn of investments in iron ore production by ArcelorMittal.
Mr. Konneh, who started his role in February 2012, is trying to take Liberia through its next phase of development.
He has implemented plenty of reforms, including pushing through measures to increase the use of the local currency in what is still a heavily dollarized economy.
In 2012, he introduced the country’s first medium-term budget, which had a four-year outlook, arguing that Liberia could not carry out its policies while only preparing one year in advance. He says this will help ensure that his expansionary fiscal plans, which have led the budget deficit to rise from 0.5% of GDP to 5.5% in the past two years, do not get out of hand.
“Because of our desire to invest in public sector programmes, a budget deficit is to be expected,” he says. “There is pressure on our budget. But it’s not because of irresponsible spending. We have serious infrastructure challenges that need to be addressed.”
Liberia has a long way to go and Mr. Konneh, who fled to neighboring Guinea as a refugee when he was a teenager to escape his country’s violence, has no illusions about the scale of the task. But there is little doubt that substantial progress has been made so far.