The World Bank and the IMF must give post-conflict and fragile states a greater voice in the international development debate, the Liberian minister of finance Amara Konneh told Emerging Markets on Friday.
“It is a concern for the African caucus,” he said. “It’s one of the things we’ll be raising with the World Bank president and the IMF [managing director]. We’ve been raising it for years—the issue of increased voice for low-income countries, and the issue of equity in terms of resource distribution, especially focused on fragile and conflict-affected states.”
The post-conflict countries and the African caucus are lobbying for a greater input into discussions, as well as flexibility in donor conditions. “You cannot expect countries that have been through conflict, that are experiencing difficulties in capacities, to have the same standards as those who do not,” Konneh said.
“We believe we must have this if we are to achieve the goal of reducing poverty to 9%, as the World Bank president has said. You have to focus on the countries that are plagued by poverty the most, and exercise flexibility in their procurement rules so that they can move faster in their development rules. If we hold them to the same standard as developed countries, you can’t expect fast progress.”
Liberia, which emerged from civil war in 2003, remains close to the bottom of the UN’s Human Development Index and has poverty levels of around 60%. Its economy has been growing by more than 5% since 2005, and expanded by 8.3% in 2012, buoyed by a resumption in production at its iron ore mines. But poverty is persistent and will require concentrated support to address.
Infrastructure in Liberia is a massive constraint. At 54¢ per kilowatt hour, the country’s electricity is the most expensive in Africa. Roads within the country and linking it to its larger neighbours, such as Cote d’Ivoire, are severely degraded. Fixing this forms a major part of the country’s poverty reduction strategy. To successfully implement its five-year development strategy would cost Liberia more than $2 billion.
“We don’t have that money. Our budget is around $600-700 million,” Konneh said. The country is working with multilateral and bilateral donors to mobilize resources, and the completion of the Highly Indebted Poor Country programme in 2010 has also given it new fiscal space to borrow.
The tax base, though, is low. The country’s mining, timber, palm oil and rubber industries are beginning to generate revenue, and explorers are looking for oil offshore, working on the assumption that the country sits on the same geological feature that has yielded discoveries in Sierra Leone to the north-west and Ghana to the south-east.
Liberia is consulting with resource management experts about creating a sovereign wealth fund to reinvest its commodity revenues into infrastructure and economic diversification, similar to those created by other resource-focused economies.
“We are looking at the Ghana model, the Botswana model and the Timor-Leste model,” Konneh says. “We are trying to see, by learning from these models, [whether] we can develop a unique Liberian model.”