Your Excellency Vice President of the Republic of Liberia, Ambassador Joseph Nyumah Boakai;
Executive Governor, Central Bank of Liberia, hon. Milton A. Weeks;
Minister of Finance and Development Planning, Hon. Boima S. Kamara;
Country Representative, International Monetary Fund, Mr. Charles Yartey;
Other Officials of the Liberian Government and the Central Bank of Liberia;
Ladies and Gentlemen.
It is a distinguished honor for me to represent the World Bank Liberia Country Manager at the launch of the Financial Sector Development Plan (FSDIP) today. Madam Larisa Leshchenko is out of the country and has requested me to congratulate the Government of Liberia, led by the Central Bank for committing to reforming the financial sector of Liberia.
A country’s financial sector plays a critical role in economic development. Stable deep, diversified, efficient and inclusive financial systems are essential elements for achieving Liberia’s ambitious development goals as laid out in the Agenda for Transformation (AfT) and Liberia RISING 2030, and the World Bank Group’s goals of ending extreme poverty and boosting shared prosperity. The emergence of a more diversified economy that generates jobs is constrained by several factors, including the limited access to finance, particularly for the agricultural sector which has the potential to generate employment and enhance food security.
Well-functioning financial institutions and markets contribute to growth, shared prosperity, and poverty alleviation through multiple channels. Financial institutions and markets play a fundamental role in the delivery of essential infrastructure such as roads, power plants, schools, and housing. Finance also generates growth and jobs by allocating scarce resources efficiently and allowing dynamic firms to start, grow, and innovate. Finance also helps people manage their resources, expand their opportunities, and improve their living standards.
Finance matters for development not only when it functions well, but also when it malfunctions. Unsound financial markets can lay the foundations for financial crises, causing severe economic and social distress and eroding hard won gains in output, employment, poverty and inequality. In the aftermath of a financial crisis, output falls, unemployment rises, and real housing prices decline. Financial crises also have an impact on socioeconomic indicators, such as life expectancy and school enrollment, particularly in developing countries. In the aftermath of the 2008 global crisis, global growth fell to almost zero in 2009 and the developing regions with closer ties to developed countries, such as Europe and Central Asia, contracted by almost 5 percent in the same year.
Finance is clearly important for development, and the FSDIP provides a comprehensive and clear roadmap on how to strengthen the financial sector, and increase its contribution to Liberia’s development. Certainly there are challenges to face, including low levels of access to finance in the country, particularly rural areas, as only 17.6% of adults had an account with a commercial bank. Other challenges include the low profitability of the banking sector, high level of Non-performing Loans, the loss of correspondent banking relationships.
But these challenges also present opportunities, building on recent achievements. The financial sector has only just begun to contribute to Liberia’s development, to realize its potential as a catalyst of development. Liberia has the opportunity to increase financial inclusion, increase the contribution of the financial sector to Liberia’s development. The introduction of mobile money holds great potential to increase access, particularly in remote areas not covered by formal financial institutions. Recent Investments in modernizing financial infrastructure, payment systems and a collateral registry, also hold great potential.
It is very encouraging to see such a strong turnout for this event, as we all have an important role to play in implementing the FSDIP. For development partners represented today, our role is not only to support the Government’s strategy, but also to ensure that that support is delivered in a well-coordinated and harmonized fashion, so as to increase the effectiveness of our support. So I welcome the FSDIP and commit the World Bank to supporting it in collaboration with other development partners. I am very pleased to announce that the World Bank will support the implementation of the FSDIP through a new project focused on Financial Inclusion. This project is funded by FIRST, which is represented here today.
Once again thank you for giving the World Bank the honor of participating in this important launch event. I want to congratulate CBL for its leadership in developing the Financial Sector Development Implementation Plan (FSDIP), and once again reiterate the World Bank’s strong support and commitment to help implement it. Thank you.