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A previous post discussed some of the challenges Liberia is facing in the light of weaker economic growth and how it should focus its efforts on improving the business environment, increasing productivity and value-added in agriculture, and attracting investment in non-extractive sectors.
A key part of this effort is to address Liberia’s severely inadequate energy and road infrastructure, which have been identified by various analyses as a critical binding constraint to private sector development and diversification, as well as public service delivery. As such, the government has placed strong emphasis on infrastructure development in its development agenda. This post discusses the country’s progress in addressing its infrastructure deficit.
Considerable funding for the energy sector is starting to show results, but further improvement will increasingly rely on improving capacity in the sector
Energy production and access in Liberia is among the lowest in the world, while electricity tariffs are among the highest, hindering value addition and growth in the manufacturing sector. This situation could improve substantially in the coming years.
Generation capacity has been only 23 megawatts (MW) for several years. Three heavy fuel oil (HFO) plants were installed in 2016, adding 38 MW (see figure 1). Additionally, in December 2016, the government commissioned the first of four turbines for the Mount Coffee hydropower plant, adding 22MW. By August 2017, all four turbines will be operational, adding up to 88MW of electricity during the rainy season. Moreover, work is also progressing on the West African Power Pool (WAPP) electricity interconnection project, which could add 27 MW of power from Cote d’Ivoire from 2019. This is expected to increase the installed capacity more than six-fold in less than three years and will make a significant step towards returning Liberia to its pre-war installed capacity of around 191 MW.
Overall electrification—including from private generator, solar power, or Liberia Electricity Corporation (LEC) connection—was 14.4% as of 2014, one of the lowest rates in the world (see figure 2). The publicly supplied (LEC) access rate was even lower, at only 4.5%.
Yet with significant donor support, LEC has been gradually expanding the electricity grid. Connections in and around Monrovia have increased from 13,000 in 2012 to 48,000 in February 2017, and funding is available for more than 100,000 additional connections in the coming years. Outside the capital, several communities in three rural counties are importing lower cost energy from Cote d’Ivoire, totaling around 6,000 connections.
Electricity tariffs have been among the highest in the world at US 52 cents per kWh (kilowatt hour). This compares to 29 cents in Sierra Leone, or 16 cents in Cameroon. Tariffs were reduced to 39 US cents in March 2017 as production costs have dropped with lower cost hydro-power and HFO generation coming on stream.
Further tariff reductions will be carefully weighed against the need to improve financial and technical performance of LEC. The LEC is gradually working to address high technical and commercial losses, as well as a significant share of non-vending connections, which have increased as access has expanded.
To ensure sustainability and continued expansion in the energy sector, longer term measures will be necessary to improve the weak institutional and human capacity that impede planning, operations, and regulation, from generation to distribution. Signing a new management services contract for the LEC in 2017 would be a major milestone in this regard.
Some key transport corridors have been paved, but significant gaps remain
Liberia’s very limited road infrastructure is also a binding constraint to growth. Only 5% of Liberia’s road network is paved, and only 11% is rated in excellent or good condition. About 45% of households are able to access an all-season road within 5 km.
Poor road infrastructure contributes to a significant increase in the cost of basic commodities outside Monrovia, which worsens as the distance increases from the capital (see figure 3). During the heavy rainy season, many parts of the country’s interior without paved road access can be cut off. Improved road access is necessary to improve access to markets, increase agricultural production and value addition, and reduce exclusion.
Progress has been made on some key economic corridors in recent years. The main corridor into the country from Monrovia up to the Ganta and the Guinea border has been paved, as well as the road from Monrovia to Buchanan −a key economic center (see figure 4). Various roads in and around Monrovia have been paved or works are underway. Additionally, maintenance is being performed on the paved road from Monrovia to the Sierra Leone border. The Fish Town to Harper road in the southeast is being paved. Moreover, financing has been secured for the first 80 km into Lofa country (in Liberia’s north), a key agriculture production area.
Despite this progress in upgrading key transportation corridors, significant gaps remain to create a paved road network. These include further paved connections into Nimba County through to Cote d’Ivoire, and completing connections to Lofa County and to the southeast, among others.
In the light of the government’s tighter borrowing constraints and anticipated lower revenue growth, prioritizing which roads to pave using economic value considerations will be necessary. In doing so, it should consider efforts to support commercial and agricultural development, public service delivery, and improved welfare in rural areas.
Moreover, as the road network expands, increasing allocations to maintenance will increase in importance. As part of these efforts, the government approved a Road Fund Act in 2016. Revenues from a fuel levy will finance the fund. 60% of resources are to be set aside for road maintenance and 40% for rehabilitation. However, the fund is not yet operationalized. Despite a US $18 million budget in the 2016/17 fiscal year for ongoing road works, historically, actual expenditure has been significantly lower than budgeted.
The Liberian government should establish clear funding priorities and address institutional constraints to maintain and expand infrastructure in the medium term
Infrastructure constraints, although improving, still present a bottleneck to growth. With financing sources and borrowing capacity likely to tighten, careful planning and institutional improvements will be needed to make the best use of future funds.
Continuing expansion and sustainability in the energy sector will increasingly call for a strong focus on institutional and capacity improvements. Establishing medium and long-term priorities for generation and network expansion is also critical.
In the roads sector, the government should carefully prioritize future road financing in light of economic returns and employment generation. Additionally, operationalizing the Road Fund to set aside and manage funding for maintenance and rehabilitation will be key to maintaining investments.
Progress in these areas will help Liberia to gradually improve its productive capacity and citizens’ livelihoods.
 Household Income and Expenditure Survey (HIES), 2014.
 Spatial Analysis for Transport Connectivity and Growth Liberia, Cardno, 2016.
 Demographic and Health Survey (DHS), 2013.