MONROVIA: The World Bank 2022 Index of Economic Freedom has recorded a dismal performance rate of 47.9% for Liberia.
This mark places Liberia, Africa’s oldest republic, in the 39th position among 47- Sub-Saharan African countries.
Additionally, Liberia’s overall score (47.9%), as captured in the World Bank’s Economic Freedom Index, is below the regional and world averages.
The World Bank’s Economic Freedom Index places focus on twelve thematic areas: Tax Burden, Government Spending, Fiscal Health, Property Rights, Judicial Effectiveness, and Government Integrity.
Others are Business Freedom, Labor Freedom, Monetary Freedom, Trade Freedom, Investment Freedom and Financial Freedom.
According to the report, Liberia’s overall tax burden equals 20.2 percent of the country’s total domestic income.
The report also mentioned that government expenditure has amounted to 56.4 percent of total output Gross Domestic Product (GDP), over the past three years, while budget deficits have averaged 6.5 percent of GDP and Public debt is equivalent to 61.8 percent of GDP.
The report also noted that expensive and unreliable electricity, poor roads and Internet outside of urban areas, and contradictory government decision-making hold back business freedom.
Labor rights violations and child labor abuses are common. There are 20 large and subsidized state-owned enterprises, and the government has no plan to privatize any of them.
Property Rights-32.2, Judicial Effectiveness-23.4, Government Integrity-25.1, Trade Freedom-60.8, Investment Freedom-55.0 Financial Freedom-20.0, Tax Burden-86.1 Government Spending-68.0 Fiscal Health-64, Business Freedom-34.8, Labor Freedom-43.2, and Monetary Freedom-61.7
The report also pointed out that Liberia has a single preferential trade agreement in force. The simple average tariff rate is 12.1 percent, and three nontariff measures are in effect.
The report, however, noted that some nontariff barriers have been dismantled, but “a lack of transparency persists while foreign investment in several sectors is restricted.”
The report concluded that Liberia’s overall financial system is underdeveloped, and much of the population remains outside of the formal banking sector.
According to the World Bank 2022 Economic Freedom Index, Liberia’s economy contracted in 2019 and 2020 before recovering some growth in 2021 while Economic Freedom has delayed over the past five years.
The report further indicates that while score increases for government spending and fiscal health is being overshadowed by turn down in judicial effectiveness and business freedom, Liberia has recorded a 1.2-point overall loss of economic freedom since 2017 and has fallen deeper in the “Repressed” category.
“The economy is not heavily burdened by taxation, but labor freedom and financial freedom are weak,” according to the World Bank.
The report noted that while Liberian law protects property rights and interests, enforcement mechanisms remained fragile.
The report also added that the process for enforcement of contracts is lengthy while less than 20 percent of land is registered.
Additionally, the report highlighted that “conflicting land ownership records are common in Liberia as judiciary system is impeded by corruption, backlogs, and funding shortfalls to mitigate these conflicts.”
“The country suffers from both public-sector and private-sector corruption”, the reported pointed out.
The 2022 World Bank Economic Freedom Index pointed out that the impact of COVID-19 as of December 1, 2021, 287 deaths had been attributed to the pandemic in Liberia, and the government’s response to the crisis ranked 99th among the countries included in this Index in terms of its stringency. The economy contracted by 3.0 percent in 2020.
Highlighting Liberia’s history past, the reports indicated that: “Settled in the 19th century by freed slaves, predominantly from the United States, Liberia enjoyed relative peace until a long and bloody civil war that ended in 1995.
Rebel leader Charles Taylor was forced to step down as president in 2003 and was later convicted of war crimes.
Ellen Johnson Sirleaf became president in 2006 and stabilized the country during her two terms”.
The report continues: “In 2017, former soccer star George Weah won the presidency in an election that was marred by allegations of fraud.
Report: “Opposition and independent candidates performed well in the December 2020 mid-term elections, reflecting popular frustration with governmental corruption and economic underperformance.”
The report stressed, among other things, that although Liberia is rich in natural resources including rubber, mineral resources, and iron ore, “poverty is widespread.”