By James T. Brooks
MONROVIA – More than US$100 million in Liberian bank credit remains tied up in non-performing loans, starving farmers, traders, and small businesses of critical financing while financial institutions sit on idle deposits they refuse to lend. The severe credit crunch formed the central focus of a high-level national conference aimed at untangling the country’s financial sector bottlenecks.
Speaking to an audience of bankers, lawmakers, judges, and regulatory officials at the opening of the three-day summit, President Joseph Nyuma Boakai emphasized that the national economy cannot recover while capital remains frozen. He stressed that the true burden of the crisis is borne by everyday citizens rather than financial institutions.
“It is about the Liberian farmer who needs financing to expand production. It is about the young entrepreneur with a good business idea but no access to capital,” President Boakai declared.
He explained that when loans go unpaid, banks naturally adopt overly cautious lending behaviors, causing credit to become prohibitively expensive. Tying the initiative directly to his ARREST Agenda for Inclusive Development, the President called for tangible results over rhetoric, emphasizing that the event’s true success will be measured solely by post-conference implementation.
Official conference documents reveal that Liberia’s system-wide non-performing loan (NPL) ratio stood at a staggering 19.1% in December 2024. This figure is nearly double the Central Bank of Liberia’s 10% regulatory threshold and roughly four times the international benchmark of 5%. Although unaudited data indicates the ratio eased to 12.87% by December 2025, officials attribute this drop to accounting write-offs and debt restructurings rather than a genuine resumption of borrower payments.
Consequently, real-economy lending has continued to shrink. Private sector credit fell to 10.1% of gross domestic product at the end of 2025, down from 11.1% the previous year, a figure that pales in comparison to the Sub-Saharan African average of 29.4%. Meanwhile, commercial banks remain heavily liquid, maintaining conservative loan-to-deposit ratios of approximately 35%.
The real-world consequences of this lending freeze are stark. World Bank data indicates that nearly 40% of surveyed Liberian businesses now identify a lack of access to finance as their primary operational hurdle, up from 30% a decade ago.
Finance Minister Augustine Kpehe Ngafuan acknowledged that state actions have historically exacerbated the problem. Delays in government payments to private vendors and contractors routinely spill over into the banking sector, creating a chain reaction of default. Ngafuan noted that when the government fails to pay its contractors, those contractors subsequently default on their bank obligations. To rebuild state credibility as an economic asset, the government has budgeted nearly US$235 million for debt servicing this fiscal year, with over 90% already disbursed.
Central Bank of Liberia Executive Governor Henry F. Saamoi called for decisive, multi-sectoral action to address the 19.1% NPL level. Contextualizing Liberia’s position within the region, Saamoi noted that Ghana recorded a 21.8% NPL ratio in 2024, compared to lower levels in Nigeria (8.1%), Guinea (6.3%), and Uganda (4.6%). He emphasized that no country has resolved a systemic NPL crisis through isolated actions, outlining five core goals for the conference: establishing a shared understanding of NPL drivers, assessing regulatory and legal gaps, strengthening credit risk management, incorporating international best practices, and drafting a binding national resolution roadmap.
President Boakai outlined several key structural reforms required to unlock lending, including modernizing credit reporting, improving land administration, strengthening collateral registries, expanding digital financial services, and enacting a robust legal framework for insolvency. He insisted that delegates conclude the summit with clear institutional assignments, defined timelines, and tracking mechanisms.
World Bank Country Manager Georgia Wallen highlighted four priority areas for sector recovery: building a foundation of trust through reliable identification and collateral systems, enforcing strict discipline for both lenders and borrowers, rapidly resolving distressed assets, and aligning financial stability with inclusive growth. Wallen highlighted recent progress, including the launch of Liberia’s Enhanced Collateral Registry, a US$6 million LIFT Project credit line that has financed 253 micro, small, and medium-sized enterprises with zero defaults, and an US$81 million guarantee from the Multilateral Investment Guarantee Agency to expand Orange Liberia’s mobile money infrastructure.
Adding an international perspective, U.S. Chargé d’Affaires Joe Zadrozny drew parallels to the American savings and loan crisis of the 1980s, reminding attendees that troubled assets do not resolve themselves over time. He urged leaders to transition immediately from diagnosis to actionable reform, pressing delegates on specific timelines for modernizing the national credit information system.
The conference, held under the theme “Promoting Access to Finance to Support Private Sector Growth and Job Creation,” is jointly supported by the Liberian government through the World Bank-financed LIFT Project, the Central Bank of Liberia, and private financial institutions. Delegates are tasked with formulating a comprehensive policy roadmap and an actionable reform plan structured around five key pillars: prudential strengthening, legal and judicial reform, credit infrastructure modernization, market development, and borrower discipline.
According to background briefing materials, the root causes driving Liberia’s non-performing loan accumulation include lax underwriting standards, credit information deficits, lengthy judicial debt-recovery processes, corporate governance shortfalls, the absence of a secondary market for distressed assets, and a widespread lack of borrower repayment discipline.
Comments are closed.