Liberia sees a second chance


Kanika Saigal
Published on:

For many international investors, Liberia isn’t relevant. It offers little in terms of natural resource, while global banks find doing business there too risky and its young and poor population offers little commercial opportunity. Can China help turn this around?


Central Bank of Liberia in Monrovia


It was 2012. Steve Cashin, chief executive of financial services investment company Pan African Capital Group and director of International Bank Liberia Limited (IBLL), sat in a stuffy conference room in Washington DC with a few of his peers from other banks based in Pakistan and the Caribbean Islands.

Opposite him were a number of representatives from the US government, regulatory bodies and banks. They were brought together by the Center for Global Development (CGD) and the Milken Institute to give Cashin and his associates the opportunity to make a plea for the US banks to re-open some of their correspondent relationships.

One by one, banks had severed ties with smaller financial institutions in risky countries such as Liberia following a swathe of anti-money laundering (AML) and know-your-customer (KYC) related fines. This was Cashin’s chance to fight his corner.


Steve Cashin,
Pan African
Capital Group

“There was a guy from the Department of Justice there,” remembers Cashin. “He was shaking. I’m not sure if it was out of anger or pure frustration that he was forced to be there, sitting opposite us, listening to our side of the story when he thought we were not worth his time. Liberia just wasn’t important to them.”

Correspondent bank relationships are Liberia’s link to the global financial network – as is the case for many emerging and frontier markets and the reason why Cashin was flanked by bankers from Pakistan and the Caribbean.

“Having a relationship with a highly rated bank creates a window into all the other relationships that we have around the world,” says Cashin. “It creates efficiency, transparency and confidence that we are a bona fide bank. Without them, it doesn’t just limit access to the global financial markets for customers but brings into question our legitimacy.”

But Liberia had a problem with corruption that muddied the reputation of its banks at the time. Nothing would convince the regulators or banks to budge.

“They preferred to forget about us,” says Cashin.

Plan B

By the end of 2012, ING, MoneyGram International, HSBC and Standard Chartered had been fined a combined $3.2 billion. In the years that followed, one by one, IBLL’s correspondent banking relationships fell away. Citibank, Standard Chartered, Standard Bank, Commerzbank and BMCE all stopped doing business with IBLL.

Some others limited their relationship with IBLL to trade finance and remittances, but for the most part the bank was forced to use services from second- or third-tier players that took advantage of the banks’ vulnerability and ate into profits.

Cashin left the Washington meeting to work on plan B and speak with regulators in the UK and Europe. His time trying to convince them to come to their rescue was much more successful; and the bank has been able to create a thriving trade finance business for local companies in Liberia with support from Crown Agents Bank in the UK.

“Banks in Liberia don’t make money from deposits or government bonds as they do in many of Africa’s other nascent markets,” says Cashin. “In fact, Liberia has no real government bond market to speak of.”

Euler Bropleh 160x186

Euler Bropleh,

The country’s first treasury bills were issued in 2013, with yields of 2.2% – the lowest of any African T-bills at the time. According to the central bank website, the most up-to-date data record of government-issued bonds, the last issue was in August 2015 and was undersubscribed by 25%.

Nevertheless, IBLL has flourished.

“We have made a year-on-year profit since our investment in IBLL back in 2006, taking our capital base of $5 million to around $20 million today,” says Cashin.

In 2018, IBLL recorded profit before tax of L$273.3 million ($1.32 million) compared with L$244.4 million in the previous year. Total assets for the bank grew from L$15.4 billion in 2017 to L$21.2 billion in 2018.

“We make our money by investing in and supporting Liberia’s commercial class – at a time when few other will take this risk – and we do it in an open and transparent manner,” he says.

IBLL shows that with determination there is business to be done in Liberia, despite the country’s exclusion from global networks. It isn’t always easy, though.

Euler Bropleh, chief executive of VestedWorld, an early stage investment company focused on emerging markets, says: “But mention Liberia in investment circles? People either don’t know where it is or don’t want to invest in a country that has been ‘riddled’ with Ebola.

“It’s not worth the reputational risk [for them].”

Gyude Moore, a visiting fellow at the CGD, says: “When the civil war ended – this should have been the time that Liberia integrated into the global financial markets.

“Instead, the country was sidelined, more or less forgotten by international financial markets, only to surface in the media for all the wrong reasons.”

Economic growth in Liberia soared in the early 2010s – albeit from a low base. By 2013, GDP growth hit 8.7%, just shy of double the average growth rate for the whole continent that year. Under the enhanced Heavily Indebted Poor Countries (HIPC) initiative, a whopping $4.5 billion of Liberian debt was written off in 2010.

Mention Liberia in investment circles? People either don’t know where it is or don’t want to invest in a country that has been ‘riddled’ with Ebola 
 - Euler Bropleh, VestedWorld

As a result, the debt-to-GDP ratio fell from 172% to a much more manageable 32% in 2011. At the same time, donor aid continued to flow into the country and in 2011 the OECD calculated that Liberia received $765 million in development assistance – 73% of its gross national income (GNI) at the time.

Politically, the country was in safe hands. Ellen Johnson Sirleaf, Liberia’s president between 2006 and 2018 and Africa’s first female head of state, was an ex-Citi and World Bank employee.

In 2003 she was a central figure in ending the war that had ravaged civil society and the economy for more than 20 years. She was respected by the international community just as much as she was by the citizens of Liberia.

ExxonMobil, Chevron and Mittal started showing an interest in Liberia’s natural resources, buoyed by the country’s new stable status under Sirleaf’s leadership.

This was all happening at the same time that the ‘Africa rising’ narrative had begun to take shape. In 2006, the Seychelles became the first African country after South Africa to issue a Eurobond. Ghana, Nigeria, Senegal, Kenya and many others followed. One after another, African sovereigns issued debut Eurobonds at surprisingly low yields, gradually integrating into the global financial community.

By 2010, Liberia had gone from the most indebted country in the world to one of Africa’s most promising. Could it too start to plan a Eurobond?

“I remember it then,” says Taa Wongbe, managing partner of The Khana Group, a social impact advisory firm, which focuses on Africa and who is from Liberia. “The hope, it was tangible.”

But it was short lived. By the late 2000s, banks were de-risking.

“Dodd-Frank and the Patriot Act gave the regulators more leeway to punish banks and fines grew exponentially,” says Cashin.

According to consulting firm Quinlan & Associates, between the start of the global financial crisis and 2017, the top 50 global banks were fined $342 billion by US and European regulators alone. The firm estimates that by 2020, fines will surpass $400 billion.

“It was easy to cut ties with banks in Liberia,” says Bropleh. ‘The country had potential but hadn’t made any real progress. Moreover, the total flow of capital in and out of the country and fees generated by those transactions are relatively small.”

Tough times

According to an IMF report focusing on correspondent banking relationships, between 2013 and 2016, global banks terminated 36 out of 75 correspondent banking relationships with Liberia. All banks there had lost at least one relationship, with the most affected bank losing 78% of its correspondent banking relationships in total.

Nigerian banks, however, fared a little better. Today, there are nine banks present in Liberia, of which nearly half are Nigerian-owned.

“They were able to use their head offices in Lagos to channel funds through,” says one US-based investor. “Mostly, the Nigerian banks are mainly involved in remittances and money transfer and repatriating dollars back to Lagos.

“They hadn’t forgotten Liberia, not at all, but I don’t think they are in Liberia to invest, just to extract whatever profit they can,” he says.

According to the IMF report, in 2016 it cost a bank $150 to process one dollar-denominated cheque.

“Things have gotten a lot better now, definitely, but these were tough times, made worse by the fact that it felt like the international banks and regulators were turning their backs on us,” says Cashin.

By 2016, ExxonMobil announced that oil exploration was unsuccessful and Chevron pulled out of Liberia in 2018. Of the other natural resources in Liberia– such as iron ore, diamonds and rubber – extraction wasn’t commercially viable. When the large international corporates left, so did the airlines. When Chevron and Exxon were active in Liberia, 11 international airlines flew to Roberts International Airport in Monrovia. Today that number has dropped to four.


Gyude Moore,

“Why would you invest in a small, poor country when you could go to places such as South Sudan, Chad or the Democratic Republic of Congo?” asks Moore. “Yes, they are risky too, but the size of their economies – and natural resource endowment – are big enough to mitigate that risk.

“Liberia, which has a small, young and poor population, doesn’t have the same scale-up potential, natural resource endowment or the disposable income that people in some of these other countries have.

“And there are smaller, less risky countries that have a lot to offer investors. Sierra Leone, Gambia and Guinea are usually higher up in the list than Liberia.”


Meanwhile, Liberia’s government has been plagued by allegations of corruption.

Last April, in one of the latest blows to Sirleaf’s legacy as president, Global Witness accused Exxon of knowing that its purchase of oil exploration ‘Block 13’ would line the pockets of Liberian officials, who illegally awarded the block to themselves when in office.

Exxon said in response that had an unwavering commitment to honest and ethical behaviour and to compliance with the US Foreign Corrupt Practices Act and local anti-corruption laws.

At the time of the sale in 2013, president Sirleaf’s son, Robert, was chairman of Liberian oil agency Nocal.

More recently, Liberia’s current president, George Weah, confirmed in May this year that the government had withdrawn the funds of international donors from the central bank without their approval. He has insisted that the money, used in part to pay salaries, would be returned and accounted for – but this hasn’t done much for the country’s reputation.

“Liberia is known for being corrupt,” says Bropleh. “This makes much of the regulatory environment unpredictable. It’s hard to do business there.”

The rankings back this up: Liberia is listed 130 out of 180 countries in Transparency International’s Corruption Perceptions Index.

In June this year people took to the streets to demonstrate against president Weah, claiming he had failed to combat corruption since his election in 2018. The protests continued into August.

International investors and banks shun Liberia while the country’s citizens suffer. The country remains the poorest in the world in terms of GNI per capita – just $710 according to the World Bank. The IMF forecasts that GDP growth for Liberia in 2019 will be a dismal 0.4%. This all makes for very disappointing reading.

“For want of a better term, Liberia is a basket case,” says Wongbe. “The government has failed us. Investors have shunned us. International banks have closed their doors to us. There may be good reasons for this, but it only makes things worse for the people.”


Liberia’s recent history is discouraging to say the least. But there are signs of independent recovery that have not yet made the headlines.

“The international community may have forgotten Liberia, but the people there have come up with their own ways to get things done,” says Stefan Nalletamby, director, financial sector development at the African Development Bank. “They are innovative and resilient – probably a consequence of the country’s turbulent past.”

Liberians take whatever tools are at their disposal. One of the more interesting examples of this are the village savings and loan associations (VSLAs) that offer support where formal banking systems are absent. They were also maintained during the Ebola crisis by support from aid organizations that were able to top up funds when times were tough.

Few statistics on VSLAs in Liberia are available, but their success elsewhere might be an indication of how they could work for Liberia.

In Ghana, VSLAs were associated with increased savings, access to credit and financial participation in fieldwork carried out by Innovations for Poverty Action (IPA). The Ghana Agricultural Development and Value Chain Enhancement (Advance) project, funded by USAid, found that these types of groups were of great benefit to women.

“VSLAs play a critical role in bringing financial services to some of the country’s most vulnerable people,” says Nalletamby. “This is one initiative that could support financial inclusion in Liberia.”

Another is technology. Africa is well known for its ability to leapfrog legacy infrastructure, and mobile money has taken off on a continent where bricks and mortar banking often isn’t viable. According to the IFC, just 7% of Liberia’s 4.7 million population are banked, but more than a quarter own a mobile phone – a sign that the country is ripe for a mobile money revolution.

If private-sector money won’t come to Liberia, other players will – China, Russia and Gulf states have shown keen interest in the continent 
 - Gyude Moore, Center for Global Development

There is evidence that this is already happening. Liberian telecommunications company Lonestar Cell MTN offers a digital wallet, allowing users to pay utility bills, school fees, top up phone credit and buy goods and services at businesses registered on the platform.

Banks are also starting to get in on the action. Pan-African player Ecobank and the Nigerian banks in Liberia are also rolling out mobile money products and introducing agency banking in the country.

“It’s a no-brainer,” says Bropleh. “In a country where 90% of the roads aren’t tarmacked, getting to and from a bank to deposit or withdraw money costs more than it is worth. It’s been tried and tested around Africa – mobile banking will get around a number of issues related to Liberia’s lack of infrastructure.”

And then there’s China. The country’s ambitions in Africa aren’t deterred by political or economic risk in Liberia. And under the Belt and Road Initiative, Chinese state-owned companies are positively encouraged to go out and get business.

In September, China committed Rmb200 million ($27.8 million) to Liberia for infrastructure projects. News reports also noted that China offered Rmb2 million ‘in kind’ to the ministry of finance to enhance its productivity and to build capacity.

Ten years ago, China invested $2.6 billion in an iron ore project in Liberia and the first shipment was delivered in 2014. In 2018, Liberia finished the development of a new passenger terminal at Roberts International Airport in the country’s capital, Monrovia, with a $49.8 million concessional loan from Export-Import Bank of China.

“If private-sector money won’t come to Liberia, other players will – China, Russia and Gulf states have shown keen interest in the continent,” says Moore. “And as long as the investments are managed wisely, Chinese interest in Liberia could be a game changer.”

Liberia has all the ingredients to move from poverty to prosperity for a second time since the end of the civil war in 2003. Can the country get it right this time?

The curse of Ebola

On July 17, 2019, the World Health Organization (WHO) declared the Ebola outbreak in the Democratic Republic of Congo an international emergency. So far, Liberia remains untouched by the most recent outbreak. The association, however, is strong.

The first two cases of Ebola in Liberia were confirmed in March 2014. Christian leaders there declared Ebola a curse from God – similar to the way the HIV/AIDS epidemic was viewed decades earlier – a punishment for those living sinful and corrupt lives. By the following May, the WHO declared Liberia Ebola-free and the land borders reopened.

The curse was over and Liberia began looking forward. Two years later, well-known former AC Milan football player George Weah was elected president in elections deemed free and fair by the international community. There was real hope that his success would boost the economy.

It wasn’t to be.

The peaceful transition in Liberia didn’t play out like other sub-Saharan Africa countries such as Ghana, Nigeria and Senegal. International investors invested in their success. Liberia, however, was ignored.

This was partly because, even five years after the height of the Ebola crisis, the region is still synonymous with the disease, says Taa Wongbe, managing partner of The Khana Group, a social impact advisory firm, which focuses on Africa.

“That’s the real curse,” he says.

Following the election of donor-darling and World Bank alumni Ellen Johnson Sirleaf in 2006, foreign direct investment in Liberia picked up. According to data compiled by the World Bank, the peak was in 2012, when FDI hit $2.31 billion, or 85% of GDP at the time.

But in 2014 – when the Ebola crisis hit – FDI collapsed to $0.5 billion or 16% of GDP and has stuck around there ever since.

“Ebola adds to the perception that Liberia isn’t a good place to invest,” says Euler Bropleh, the Liberian-born managing director and founder of VestedWorld, an early stage emerging market investment company based in Chicago.

“It’s a label we can’t shake, no matter what other news comes out of the country – not that much of it is all that good at the moment,” he says.

Liberia’s missing millions

Stories of high-profile arrests, the disappearances of public servants, mass protests and economic decline all point to corruption in Liberia. They are enough to put off even the most bullish of investors.

The most recent scandal surfaced in September 2018, when local journalists learnt that L$15.5 billion ($74.6 million) of newly minted currency requested by Liberia’s central bank two years earlier had allegedly vanished from containers stored at Monrovia’s seaport.

Even if the money was accounted for, however, didn’t this go against the policy, outlined by president George Weah just two months earlier, that the central bank would channel $25 million into the economy to mop up excess Liberian currency and stem inflation?

The Liberian dollar has lost 22% of its value in the last two years, so the exercise was well received. But surely, requesting newly minted Liberian dollars would only reverse any of the benefits?

By February 2019, investigative auditing company Kroll and a Liberian presidential investigative team (PIT) were separately tasked with finding out where all this money had gone. Both discovered a multitude of mistakes on the part of policymakers, highlighting government negligence and corruption.

While there were some differences in their findings, Kroll and the PIT found that only L$5 billion of the new currency was lawfully requested from Swedish banknote printer Crane AB, while the remainder was shipped without the central bank authorities going through the appropriate channels. The central bank, meanwhile, vehemently denies any wrongdoing, adamant that the money had always been kept in a number of vaults across the capital after it reached the country’s shores – apparently it had just taken some time for the proper authorities to point this out.

As for the $25 million, this was apparently pumped into the economy, but no proper records of the process were kept. Of the companies that the central bank claims received cash as part of the mopping-up exercise, 15 denied any involvement, 27 were not registered companies, 52 didn’t respond to enquiries by the PIT and another eight were not in operation when the PIT made its visits.

Kroll also found that of the $25 million ring-fenced for the mopping-up exercise, $5 million was pumped into the economy without the withdrawal of any local currency. The company also reported that all of the old Liberian dollars that were removed from circulation were reintroduced into the economy within six months.

“I had no idea about the ‘mop-up’ exercise until the Kroll report came out,” says one local banker. “You would think they would have the foresight to tell the banks if this was their plan.”

Former central bank governor Milton Weeks and his deputy Charles Sirleaf (son of the former president, Ellen Johnson Sirleaf) are being prosecuted in connection with the missing money. Meanwhile, some mid-level bank staff, who may have feared that they might be used as scapegoats in the case, have disappeared.

To date, around L$2.6 billion is still unaccounted for. That might not seem like much in terms of global crime, but it is when the country’s annual GDP is only $2.2 billion.

“Liberia has an impressive ability to make money disappear,” says one investor based in the US. “It’s the kind of magic trick that doesn’t just spook investors but scares them so much that they would rather have nothing to do with the place.”