Businesses may consider Liberia attractive for entry due to its natural resources, low cost of labor, and relatively low levels of foreign investment, which could enable enterprising firms to become dominant players. Liberia’s economy is market-based and largely dependent on natural resources, foreign aid, and foreign direct investment (FDI). The few large foreign concessions, such as Orange Liberia, Firestone, ArcelorMittal, and MNG Gold, pay a large proportion of the government’s taxes and royalties. Liberia relies on commodity exports (mainly rubber, iron ore, and gold) as its major source of export earnings. Binding constraints to economic growth include inadequate infrastructure (roads, ports, electricity, water, sewage, and telecommunications), widespread corruption, limited access to finance, cumbersome tax regulations, weak institutional capacity, and a shortage of skilled labor. According to the International Monetary Fund (IMF), Liberia’s real GDP expanded 4.8 percent in 2022 and is projected to grow by 4.6 percent in 2023. The Central Bank of Liberia (CBL) expects growth in 2023 to be driven by increased activity in agriculture, manufacturing, and services.

Downside risks, however, include structural macroeconomic imbalances and reduced economic activity because of inflationary pressures caused by Russia’s invasion of Ukraine and reduced business investment due to the October 2023 presidential election. Average annual inflation was 9.2 percent in 2022 and is projected to rise to 12.1 percent in 2023, according to the IMF. Export earnings for 2022 grew by 20.1 percent to $1.1 billion from $881 million the year before, led primarily by increased receipts from exports of gold, round logs, and diamonds, according to the CBL. Liberia’s leading export destinations in 2022 were Europe (75 percent, mainly iron ore and gold), followed by Asia (11 percent, especially China and India, which buy iron ore and palm oil) and North America (7 percent, mainly the U.S., which buys rubber). Import payments increased to $1.5 billion in 2022 from $1.3 billion in 2021, largely due to increased payments for food and petroleum products. The largest share of imports in 2022 came from Asia (43 percent, primarily China, India, and the Middle East), followed by the rest of Africa (29 percent, mostly from neighboring countries), Europe (16 percent), and North America (6 percent).

While U.S. investment in Liberia is minimal, the following are among the reasons American companies may choose to enter or expand into Liberia’s market:

· Low cost of labor: The minimum wage for a formal sector job is US $5.50 or its Liberia dollar equivalent per day. The informal sector’s general minimum wage is around US $3.50 or its Liberian dollar equivalent per day.

· Minimum restrictions on repatriation of profits and no restriction on currency exchange: The Investment Act of 2010 allows investors to repatriate capital and profits that may include profits and dividends (net of taxes), remittances of money (net of taxes) in the event of sale or liquidation of a business, and repayments of loans acquired from foreign banks.

· Large untapped natural resources such as gold, diamonds, iron ore, timber, and fish.

· Access to regional markets: Liberia is a member of ECOWAS, which has an estimated population of nearly 350 million, with approximately 60 percent young consumers.

Political and Economic Environment

For background information on the political and economic environment of the country, please click on the link to the U.S. Department of State Countries & Areas website.