Investment Opportunities in Liberia
Investment opportunities in Liberia
There is an increasing requirement of quality financial services in Liberia. A strong financial system serves as the basis for growing much of the domestically driven economy and also providing a bridge for foreign investors to enter the country. At present, the largest growth sectors of the financial service industry include commercial banking, investment banking, leasing, and insurance. These fields provide high growth margins in direct relationship to the industries that they service.
Commercial banking is a sector ripe with opportunity due to the increasing demand from reconstruction efforts and increasing foreign direct investment. Domestic and multinational investors are in need of corporate commercial banking in order to structure the capital necessary for projects and overall expansion of operations.
Companies engaged in mining, forestry, agriculture, and infrastructure projects are looking for a local and regional source of investment banking led corporate finance. Providing the necessary tools to lead international, regional, and domestic syndicates to the next level of operational capacity in Liberia will accelerate the pace of growth in the economy.
Real Estate & Construction:
The real estate sector is growing due to the requirement of increased security and the availability of mortgages and construction finance credit. Demand for real estate construction has so far been driven by the presence of organizations such as UNMIL, the World Bank, IMF, donor representatives, NGOs, and business interests. The presence of the international organizations is not going to be a permanent fixture in the Liberian landscape, but this does not mean that real estate investment will decline with their departure. Instead, it will be maintained, if not increased, due to the repatriation of the Liberian diaspora, coupled with an increase in foreign direct investment by multinational corporations requiring offices and housing.
Majorly found structures in the country including private residences which were damaged or destroyed during the conflict. The current housing situation for most people is not tenable as the materials and construction are unsuitable for habitat. The demand for housing has grown to the point that developers are now building houses on contract so that diasporan families do not have to rely on friends and family members to build homes, instead relying on professional contractors. All these homes are being used as full or part-time homes for Liberians who wish to maintain residency in multiple countries. From an estimated 450,000 Liberians abroad, 10% visit the country regularly. If just 1% of the Liberians abroad were interested in buying a home in the country, initial demand would be for 4,500 residences, although this is considered to be a downward estimate.
In Liberia, most of the infrastructure was destroyed by the conflict, or left to fall apart due to insufficient maintenance capacity. Ports, airports, bridges, roads, power-plants, fixed communications, mobile networks, power-plants, sanitation facilities, and electricity and water distribution networks are all either in the beginning stages of rehabilitation, or require major new initiatives.
The 4 seaports in Liberia are the Free Port of Monrovia, Buchanan, Harper, and Greenville. Each of these ports requires an immense amount of reconstruction, upgrades and management expertise. The Liberian economy is based largely on trade, making the ports vital to economic growth. Although Monrovia still serves as the main port for the country, the Port of Buchanan will be the main transit point for Mittal Steel’s iron ore shipments, as well as the required equipment and machinery for its operations. Port traffic will increase dramatically in Greenville, Harper, and Buchanan as exports increase with the resumption of the timber and other products.
The government is committed to encouraging the rapid growth of the agricultural industry. Prior to the conflict, Liberia was a net exporter of foodstuffs, primarily rice, now it is dependant on imports. Rising food and commodity prices heighten the desire to increase domestic agricultural production. The revival of this sector would be instrumental in providing jobs, returning people to the country, providing food security, and turning Liberia from a net food importer into an exporter. There have been multiple investments and negotiations, the contract for Firestone’s rubber plantation concession has been ratified. Firestone has the longest corporate history in the country and their further commitment signals an institutional belief in the future of the Liberian agricultural industry. Buchanan Renewable Energies has invested USD 30 million into the renewable energy sector by recycling rubber plantations for use in domestic energy. The Libyan Africa Investment Portfolio has also invested USD 30 million in a venture with the Foundation for African Development for the production of rice. There are also investors who are looking to invest heavily in the production of palm oil. Liberia’s heavy rainfall and rich soil make it a natural choice for the large scale production of a wide variety of agricultural products.
The country has extensive reserves of iron ore, gold, diamonds, and other minerals that are proving to be extremely valuable on the international commodity markets. Revenues from iron ore accounted for nearly half of the country’s earnings prior to the civil war. All iron ore mining operations were closed during the period of conflict and the necessary support infrastructure was eroded, infrastructure which is now being replaced. Leading the way is Arcelor Mittal steel, which recently began laying the groundwork for its operations in the Bong mines, including a railway to Port Buchanan and facilities at the port for the loading of the iron ore onto cargo ships.
Other concession agreements are being negotiated with numerous mining companies, the largest being the Western Cluster, which is also laden with high-grade iron ore. After awarding the Western Cluster to a South African company, the government has hired Deloitte & Touche to complete a due diligence exercise on all five bidders prior to ratification of the contract.
Artisanal diamond and gold mines dot the countryside as Liberians search for the precious stones and minerals. Following the lifting of the UN ban on Liberian diamonds and accession to the Kimberly Process, Liberian diamonds are now accepted in international markets, and socially acceptable to conscience driven consumers. In light of this progress, the Israeli Diamond Institute has committed its expertise and resources towards helping the government of Liberia develop the diamond sector. The IDI is a consortium of Israeli diamond traders, polishers, and cutters, and represents a large percentage of the global diamond industry.
Oil Sector :
The Gulf of Guinea, stretching from Liberia to Gabon, is a known depository of oil reserves. Ghana is the latest country to announce a significant off-shore oil discovery. Evidence of oil was discovered off Liberia’s shores decades ago, but investment was never forthcoming due to the political instability that plagued the country since 1980. As these factors are alleviated, the government is in a position to negotiate with investors on the 14 off-shore blocks that have been identified. Liberia is instituting measures such as the EITI, GEMAP, PRS, and other initiatives which are being solidified as good governance bulwarks to ensure transparent allocation of these drilling rights.
Opportunities in relation to the oil-sector are expansive, ranging from financial services, shipping, housing and office space, and an array of secondary support services. International investment into this area will range well beyond just the oil exploration and extraction itself, but should incorporate many facets of the Liberian economy.
Tourism & Hospitality:
Liberia has many beautiful beaches, expansive tropical forest reserves, plant and wildlife diversity, access to deep sea fishing, and a friendly population that is welcoming to foreign guests. Hotels, resorts, and adventure tourism is gaining a niche in this West African hub, especially as people are curious to visit areas that were previously inaccessible due to political and social instability. Hotels have already sprouted up in Monrovia in order to accommodate the large influx of personnel associated with the international organizations. Immediate needs in the capital city may have been met, but this does not preclude investment in more high-end and strategically located vacation spots for the adventure traveler.