LIBERIA

Overview

The United Nations estimates the total population of Liberia at 5 057 681 as of 1 July 2020.1 Following many years of civil war, the country faces a severe housing shortage. More than 60 percent of the Liberian population lives in slums. As of 9 July 2020, the urban population is estimated at 51.52 percent of the total population. To change the desperate housing conditions in Liberia, the National Housing Authority (NHA) estimates that 500 000 houses will be needed by the year 2030.2 The annual population growth rate of Liberia is estimated at 2.44 percent.3

During the past two years, the Liberian economy was hit by an economic downturn due to a decline in the mining exports, a rising inflation rate, and a currency depreciation. According to an African Development Bank forecast4, real gross domestic product (GDP) pre COVID-19 was expected to recover by 1.6 percent in 2020 after a decline of 0.4 percent in 2019. However, the COVID-19 outbreak is likely to undermine this expected growth prospect for Liberia in 2020.

The COVID-19 pandemic is hitting Liberia at a time when economic activity was already declining, private sector confidence is weak and the rate of inflation is estimated at 22.5 percent.5 The full extent of the impact of COVID-19 is not known, but real GDP growth is now projected at -2.5 percent for 2020,6 largely due to lockdown regulations at home and abroad, which have negatively impacted domestic demand, net remittances, capital inflows, and the banking sector. In the absence of support, poor people will feel the impact the most as there are minimal social safety net mechanisms in place.7

The Central Bank of Liberia (CBL) has implemented several policy responses to contain the pandemic. These include reduced fees on financial transactions, suspended mobile money charges, and relaxed credit rules to provide flexibility to firms struggling because of the COVID-19 pandemic.8 The World Bank has committed L$2 990 million (US$15 million) in additional support to Liberia to respond to COVID-19, of which L$299 million (US$1.5 million) has already been made available as of April 2020.9

Access to finance

The Liberian financial sector comprises 10 registered commercial banks, foreign exchange bureaus, credit unions,10 rural community finance

KEY FIGURES

Main urban centres

Monrovia

Exchange rate (1 July 2020): 1 USD = [a]

199.29 Liberian Dollar (LRD) 0.52 Liberian Dollar (LRD)

1 PPP$ = [b]

Total population [b] | Urban population [b]

Population growth rate [b] | Urbanisation rate [b]

GDP per capita (Current US$) [b]

Percentage of population below national poverty line [b]

Unemployment rate (% of total labour force, national estimate) (2017) [b]

Proportion of adult population that borrowed formally (2017) [b]

Gini coefficient (2017) [b]

HDI country ranking (2018) [c] | HDI country score (2018) [c]

4 937 374 | 2 548 426

2.43% | 3.33%

US$622

57.1%

2.4%

7.5%

35.3

176 | 0.47

GDP (Current US$) [b]

Inflation rate

GDP growth rate [b]Yield on 10-year government bonds

Lending interest rate(2016) [b]

US$3 071 million

-2.28%

22.30%

n/a

13.60%

Number of mortgages outstanding (2019)

Value of residential mortgages (Current US$)

Ratio of mortgages to GDP2019)

Typical mortgage rate | Term | Deposit(2019)

Number of mortgage providers

Number of microfinance loans outstanding(2017) [e]

Value of microfinance loans in local currency units

Number of microfinance providers

100

US$2.5 million

8% | 10 years | 20%

0.08%

30 000

n/a

Total number of formal residential dwellings in the country

Total number of residential properties with a title deed (2019) [g]

Number of formal housing units built in this year(2019)

Price of the cheapest, newly built house by a formal developer or contractor in an urban area in local currency units[h]

Size of cheapest, newly built house by a formal developer or contractor in an urban area [h]

Typical monthly rental for the cheapest, newly built house [F]

Time to register property [h]
Cost of standard 50kg bag of cement in local currency units[h]
Type of deeds registry: digital, scanned or paper [h]
World Bank Ease of Doing Business index rank [h]
Number of procedures to register property [h]
Cost to register property as share of property price [h]

World Bank DBI Quality of Land Administration index score (0-30) [h]

n/a

18 000 000 XAF

n/a

54 798 LRD

1 365 LRD (US$6.85)

Paper

175

44 days

13.3%

3.5

Percentage of women who own a house alone: Total |Urban (2016) [j]

Percentage of households with basic sanitation services:

Total |Urban (2016) [j]

Percentage of households with no electricity: Total | Urban (2016) [j]

Percentage of households with 3+ persons per sleeping room:

Total |Urban (2016) [j]

Percentage of urban population living in slums (2018) [m]

n/a | n/a
16.5% | 25.9%

45.8% | 66.0%

42.7% | 48.2%

70.3%

NB: Figures are for 2020 unless stated otherwise.

[a] Xe.com

[b] World Bank World Development Indicators

[c] Human Development Reports, United Nations Development Programme

[d] ] Central Bank of Liberia

[e]] Cities Alliance

[f]Kaikana Real Estate

[g]Cemenco

[h]World Bank Ease of Doing Business Indicators

[i]Demographic and Health Surveys, USAID

[j]United Nations Human Settlements Programme

(UN-HABITAT)

nstitutions, 18 microfinance institutions,11 a development finance company, mobile money services, insurance companies, and registered credit unions.12 Some banks extend commercial credits to small and medium enterprises and concrete block companies in Monrovia. In certain situations, local retailers will provide credit to trusted clients, large homeowners and local construction professionals who rely on informal ‘’Susu credit’’, savings and remittances for capital.13

The average interest rate on mortgage loan products offered by commercial banks in Liberia was 13.69 percent from Q2 2015 to Q1 2020.14 Average mortgage rates were maintained within this band at 13.22 percent as of April 2020, although this was a reduction from 14.88 percent at the end of 2019.15 The CBL noted at the end of May 2020 that growth in credit had remained low over the past year in Liberia and that non-performing loans had increased by 2.3 percent to 19.7 percent of total loan value.16

The CBL oversees the banking practices to promote housing loans in Liberia. The CBL Mortgage Stimulus Initiative provided a loan of L$1.99 billion (US$10 million) to the Liberian Bank for Development and Investment (LBDI) in 2014 to facilitate improved access to finance.17 Because of stark lending conditions by the LBDI, such as a minimum monthly income of L$89 679 (US$450), and the high mortgage interest rate of eight percent charged, although significantly lower than prevailing average mortgage rates, the Liberian population has borrowed less money from LBDI.18 Overall mortgage finance in Liberia does not meet the housing market needs. As a consequence, less than 100 mortgages are offered per annum on average.19 Over the past year the home construction finance market has also declined significantly, with total outstanding construction-related home mortgage values declining from L$695.4 million (US$3.5 million) in February 2019 to L$122.8 million (US$617 thousand) in February 2020.20 Commercial banks offer loans to salaried workers, and bank officials estimated that 60 percent to 70 percent of these loans are used for housing construction.21 However, salaried workers represent only a small segment of the Liberian population. Banks and microfinance institutions offer loans to small and medium enterprises, but these loans typically reach only the “largest’’ enterprises within this market segment. Microfinance institutions and credit unions have relatively small operations within Monrovia. A large part of the population remains outside of the formal banking sector.22 As a result, most Liberians finance personal construction projects through cash inputs in an incremental building process. Informal Susu housing finance is not suitable for long-term housing loans.23 The NHA has proposed a National Housing Trust Fund, which would tax 2.5 percent of each formal sector worker’s salary which would, after a minimum sixmonths contribution, allow for a worker to be eligible for a mortgage fund of up to three times their respective annual income. The process is as follows: a worker earning L$199 286 (US$1 000) a month could borrow L$7 174 322 (US$36 000), absorbing the six-months saving of another 119 beneficiaries.24 Microcredit is available for associations and cooperatives which are interested in getting homes. The lack of funding in the housing sector remains a major constraint impeding access to decent housing in Liberia. Major banks including LBDI and Guaranty Trust Bank (GTBank) are seeking US$29 million from Shelter Afrique for construction and mortgages.25

Affordability

Based on a 2016 market study by Cities Alliance in Greater Monrovia, more than 80 percent of the population derives their income from the informal sector and 67 percent of Liberians live below poverty line.26 Because of this, most construction decisions by typical Liberian households are based on price and not on quality. The lack of decent incomes is aggravated by the costs of construction materials, and by other factors such as high unemployment for many Liberians.

On average, it takes seven years for a Liberian to build a house.27 The relationship between expenditure on housing (prices, mortgage payments or rent) and household income in Liberia has always been a serious issue for different governments. The high cost of housing is part of debates about social housing affordability in Liberia. The year-on-year inflation rate for housing and utilities, up until April 2020, was 10.71 percent nominally which, in contrast to a consumer price index (CPI) increase of 22.51 percent over the same period, reflects a real reduction in housing and utilities costs of 11.8 percent for the year.28 This would have had a positive impact on affordability over the period.

Housing supply

There are no updated statistics on housing stock in Liberia because the 2018 National Population and Housing Census did not take place. In the urban areas, owner-occupied housing accounted for 29.3 percent, employer-subsidised housing two percent, employer-provided housing 1.4 percent, rented housing 46.3 percent and rent-free housing 21.0 percent.29 In rural Liberia, owner-occupied housing accounts for 61.1 percent, employer-subsidised housing 0.8 percent, employerprovided housing (rent free) 3.0 percent, rented housing 6.9 percent and rent

free housing 28.3 percent.30 According to the Managing Director of NHA, Celia Cuffy-Brown, many studies put Liberia’s annual housing shortage at 512 000 units. On 22 July 2019, Shelter Afrique, the Pan-African housing financier, signed a Memorandum of Understanding (MoU) with the Government of Liberia (GoL) through the NHA for the development of affordable housing units at a cost of L$5 979 000 (US$30 000) per unit.31 In September 2020, Celia Cuffy-Brown stated that the construction of housing units for low income earners has kicked off in the country32 and furthermore that the company in the public-private partnership that is contracted to build 60 000 units had already constructed 300 housing units in the Towel Hall Community and 500 in Schefflin as part of the MoU.33 In August 2019, the NHA received assistance from a technical team from AXHIS, a construction company from Burkina Faso, for the construction of 50 000 affordable houses in the country. However, in the first phase of the project, the company is set to build 5 000.34

Property markets

According to UN-Habitat in 2014, 70.26 percent of housing units in Liberia are owned, 21.21 percent are rental houses, and 8.53 percent are either squatters or categorised as others.35

The property market is less developed and not competitive, with no market regulations in Liberia compared to other countries in Africa. The NHA is the largest formal housing supplier and is currently in the process of providing 5 000 housing units through its affordable housing programme.36 Although expected to be sold at prices as low as L$2 989 300 to L$3 985 734 (US$15 000 to US$20 000), especially in urban and periurban areas of Monrovia, these houses sometimes turn out to be very expensive, especially those put on sale by Ecohomes at L$7 772 182 (US$39 000) for one-bedroom house and L$12 754 350 (US$64 000) for a three-bedroom house.37 The completed dwellings in the SINLIB Project in Fendell are priced between L$7 772 182 (US$39 000) and L$8 370 042 (US$42 000) based on plot sizes.38 Despite being low cost in their price, these housing units are far beyond the reach of the average Liberian. The average rental price for a two-bedroom apartment is L$199 286 (US$1 000) and for a three-bedroom house, the price is above L$398 573 (US$2 000). These rental costs are beyond the reach of low-income families in Liberia

COVID-19 response

On 12 April 2020, the GoL implemented a 14-day nationwide lockdown at the outbreak of COVID-19. Because of a dramatic rise of the COVID-19 cases in the country, the Liberian authorities extended the state of emergency declared by the president until 22 July 2020 and the government continues to extend the lockdown period as COVID-19 cases continue to drastically increase in Monrovia and upcountry.

The pandemic has severely impacted the Liberian housing industry. The GoL has undertaken some measures to alleviate the consequences on the poor, namely a moratorium on evictions with the help of Liberian CSOs. The CBL, through its mortgage stimulus initiative, has provided L$1.9 billion (US$10 million) to LBDI to loan money to people, including the poor and vulnerable to maintain interest rates as low as possible.49

The IMF has also approved a disbursement of L$10 billion (US$50 million) to the GoL to mitigate the negative impact on the poor in Liberia.50

In the inclusive economic package, UAF-Africa has called on the GoL to respond strategically to COVID-19 by devising pro-poor policy measures. These measures include the freezing of house rentals, the stopping of evictions during the pandemic, and the stopping of house demolitions.51

There is no accessible information on the government’s response to informal settlements in Liberia to date.

LIBERIA

Annual income profile for rural and urban households based on consumption (PPP$), 2019

PPP$40 001 – PPP$10 000 000

PPP$23 001 – PPP$40 000

PPP$12 001 – PPP$23 000

PPP$8 001 – PPP$12 000

PPP$5 001 – PPP$8 000

PPP$3 601 – PPP$5 000

PPP$2 401 – PPP$3 600

PPP$1 601 – PPP$2 400

PPP$801 – PPP$1 600

<PPP$800

Population:

4 937 374

Urbanisation rate:

3.33%

Cost of cheapest newly built house:

3 985 334 LRD

House price PPP$:

PPP$7 664 104

No. of households (thousands)

Urban households that could afford this house with finance:

0.02%

1 PPP$:

0.52 Liberian dollar

According to the 2020 World Bank Ease of Doing Business Indicators, Liberia is ranked 104 out 190 countries on the “getting credit” indicator.39 To register a property, it takes 44 days and 10 procedures in Liberia, while it takes on average of 51.6 days and 6.1 procedures to register a property in Sub-Saharan Africa (SSA). Recorded as a percentage of the property value, the cost of registering property is 13.3 percent in Liberia, which is far below the average for SSA countries.40 Overall though, Liberia has slightly improved in the Doing Business Index. For instance, registering property in Liberia has improved by 0.8 from 31.1 to 31.9. In dealing with construction permits, Liberia ranks 185 out of 190 countries, with 25 procedures required to build a warehouse, which is higher than the SSA’s standard number of procedures.41 In dealing with construction permits, the index for Liberia has remained stable at 28.9 from 2019 through 2020. There are several real estate agencies in Liberia. These include, among others, Priceless Real Estate (Monrovia), Apartment Liberia (Paynesville), Kaikana (Sinkor), Barnesville Estate (Samie Town), Barnesville Townhall in Samie Town, Leone Investment, Johnson Compound, Gobeh Gayflor Intestate Estate, Francis Real Estate, and Waves. The lockdown has had an unprecedented impact on the property market of the country, as sales ground to a halt and the market stalled during lockdown. During the pandemic, Urgent Action Fund Africa (UAF-Africa) has been engaging with the private sector real estate industry on issues of rent freezes for the poor segment of the population.42

Policy and legislation

The United States Agency for International Development (USAID) is one of the institutions that has been providing technical assistance to the GoL. The USAID’s current activities in Liberia have been to develop standard operating procedures and regulations to enhance the implementation of the Land Rights Act of 2018 and the Land Authority Act of 2016.

The Liberia Land Authority (LLA) has the authority to implement regulation necessary for carrying out the Land Rights Act. The LLA governs land rights and land ownership in Liberia.

According to this legislation, enacted in September 2018, land ownership consists of the following land rights: the right to possess, the right to use, the right to include and the right to transfer singly or jointly by sale, devise gift or otherwise. This law covers the following ownership in Liberia: n Private land, owned or otherwise held by a private person or persons; n Government land,

owned by the government including land used for government buildings, such as government offices, government schools and government hospitals. The land the government roads pass on is also government land;

n Customary land is owned by the community and used or managed according to customs and tradition. Customary land includes, but is not limited to, residential land, farmland, communal forestlands, and fallow lands; and n Public land, which is land that is not private land, customary land, or government land.

On 6 September 2019, the Civil Society Organisations (CSO) Working Group indicated that the passage of the Land Rights Bill by the legislature marks the beginning of correcting more than a century-old injustice in the land tenure system of Liberia.43 Despite the difficulties faced because of the COVID-19 pandemic and the decadelong civil conflict that crippled the Liberian economy, the government is joining efforts with financial donors and foreign institutions to reduce the impact in the housing sector on poor and vulnerable people.

Opportunities

There is high demand and significant investment opportunities in the construction and real estate industries in Liberia due to a fast-growing urban population in Monrovia and other cities, coupled with inadequate existing housing supply.44

The cost of building materials is among the cheapest in the region and manual labour is relatively cheap.45 Since 2003, Liberia has attracted foreign direct investments to revitalise the economy and improve livelihoods of Liberians. A major component of this has been the construction of civil, industrial and commercial buildings. However, the lack of local construction materials and a small manufacturing sector, with only one factory in Liberia, have negatively impacted infrastructure development.46

An affordable housing construction model has been designed by China Africa Business Council collaboration with Hengtong Lux Wood Technology. They provide architectural design and construction materials, as well as on-site training. They also provide prefabricated building technology to reduce the construction period and costs.47

Based on the shortage of housing supply in Liberia, the best prospect for foreign companies includes supplying construction materials and equipment, and training construction workers and real estate professionals.48