Liberia: The Case for Private Sector Investment in and Drive of the Agriculture Sector in Liberia
Monday, November 18, 2019
Liberia: The Case for Private Sector Investment in and Drive of the Agriculture Sector in Liberia

Liberian Observer (Monrovia)

By Wadei Powell

Liberia has some of the most favorable climate and fertile soil for agriculture. Agriculture is currently the primary livelihood for more than 60 percent of Liberia's population (believe it or not), mostly in cassava (predominantly), rubber, rice, oil palm, cocoa, or sugarcane production.

The main cash crops yielding the highest foreign exchange are rubber (dominant accounting for 17.5 percent of the total exports in 2017), cocoa, and timber. An estimated 30,000 people are employed by commercial rubber farms (largely Firestone, LAC, & MARCO) and up to 60,000 smallholder households are involved in growing rubber trees (mostly as out-growers for sale to the larger commercial farms). Another significant cash crop is oil palm, which has traditionally been produced for the domestic market but recently, there has been considerable interest from both smallholders and large investors in expanding export production. There is also increased investment in the rehabilitation of cocoa cooperatives and smallholder farms.

Food crop production such as peppers, okra, onions, tomatoes, squash, grains, tomatoes, banana, mangoes, oranges, pineapples, etc., all food crops that are in high demand throughout the country all year round, could readily be accomplished through lowland cultivation and low-cost irrigation.

Our coastline, which spans about 580 km has abundant freshwater seafood varieties including crab, lobster, shrimp, tilapia, tuna, shark, croaker, and barracuda.

In spite of all of this, overall agricultural productivity in Liberia is extremely low, resulting in large scale import of our food and making us vulnerable to global food price volatility. Additionally, gains to be earned from food export is conversely low. Various research indicates that the major contributors to such low output are a poorly integrated sector which lacks basic infrastructure such farm-to-market roads and value chain addition through processing, manufacturing, marketing (aggregators), agro-implements (equipment), agro-inputs (fertilizers, pest control), agro-logistics (storage/warehousing, drying methods, transportation, packaging), that would allow for sales in all seasons. Another obstacle is the lack of capital and professional expertise to increase farm productivity. Additionally, uncertainty with regard to land tenure is a significant challenge.

According to the latest statistics from Trading Economics, "Imports in Liberia increased to US$97.40 million in April from US#66.70 million in March of 2019. Imports in Liberia averaged US$67 million from 2003 until 2019, reaching an all-time high of US$219.06 million in January of 2015 and a record low of US$3.40 million in August of 2003." The report goes on to further state that, "Liberia's main imports are: fuel (35 percent of total imports), machinery (25 percent) foodstuffs and manufactured goods. Liberia imports mainly from North America (32 percent of total imports) and the Middle East (28 percent)."

For those who know me, you may be asking, why this sudden interest in agriculture? The answer is simple. While it is very easy to see all of these challenges as insurmountable obstacles, and I can definitely see how and why, I instead would like to see them as opportunities for agribusiness investment, for both domestic and international markets, through private and development financing. I've been researching and exploring avenues in this area and yesterday a colleague spurred on a conversation in a chatroom that got me thinking and so I decided to delve more into his question to get some factual information and what I found was astonishing, to say the least!

According to World Bank statistics, "In 2017, the top remittance receiving countries--in dollar terms--were India, China, the Philippines, Mexico, Nigeria, and Egypt. As a share of gross domestic product (GDP) for 2017, the top recipients were smaller countries-- the Kyrgy Republic, Tonga, Tajikistan, Haiti, Nepal, and Liberia." The report goes on to say that, "Remittances represent a particularly large share of the GDP of Liberia (27 percent) " and that "... even these figures probably underestimate the total amount received, since informal remittances are rarely included in official remittance data." Following up, statistics from Country Economy show that the GDP for Liberia in 2017 was US$3,284 million.

Based on the above, this means that the 2017 "formal" remittances to Liberia was US$886.7 million. One may also infer that the inclusion of "informal" remittances could possibly increase that figure to well over US$1 billion! Unfortunately, I could not find any data that disaggregated the remittances by type but, for argument sake, let's allocate 25% of that figure to personal remittances. This would mean that approximately $250 Million USD was sent to Liberia in 2017 from the diaspora. (Now I'm no economist and I know all the "economists" will have a lot to say about this assumption, but I'm going with this anyway.)

Using this flawed but sensible layman's analysis, I would like to propose the following for consideration: If we were to direct some of this money towards private sector investment in the agriculture sector, specifically food crop, we could be well on our way to jump-starting the sector, increasing our domestic food production capacity, creating a food export channel, and creating economic independence and a private sector driven economy.

In support of this proposition, a 2010 Food and Agriculture Organization (FAO) study also suggests that, "Given the resource constraints of governments in SSA and the tight budgetary conditions in many donor countries, the private sector, both domestic and foreign, has a potentially important role to play in financing agricultural investments in the region."

What are your thoughts on this proposition??? Am I totally off the mark? Or is this something that is possible. Are there other options to look at?