J.6_Country_Development_Cooperation_Strategy_CDCS_Liberia.pdf

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COUNTRY DEVELOPMENT

COOPERATION STRATEGY

(CDCS)

JUNE 28, 2019 JUNE 28, 2024

APPROVED FOR PUBLIC RELEASE

I. Executive Summary

A. CDCS Goal

The 2019-2024 CDCS goal is: USAID/Liberia will foster self-reliance by spurring private sector led economic expansion through a focus on catalyzing reforms and cultivating a healthy, productive and educated workforce. Its three highly-interdependent pillars address the areas of greatest need: 1) Market-driven inclusive economic growth that translates into job creation, especially for youth and women; 2) Effective and inclusive governance catalyzed through reforms and greater accountability; and 3) Foundation for growth strengthened through a healthy, productive, and educated population.

The CDCS goal and its three pillars align with the three lowest sub-dimensions of Liberia’s FY2019 country roadmap1— capacity of the economy, government capacity, and human capacity. During strategy implementation, the Mission expects to progress towards the CDCS goal by supporting the foundations for Liberia’s self-reliance, that is, promoting a healthy and educated population. The CDCS goal also anchors the gender equality principles and practices as a core strategic approach across all DOs. Its implementation will recognize and take into consideration the different needs for women and men across various stages of the life cycle, especially for adolescents and youth. Together with local stakeholders, USAID will create the conditions for private sector-led economic expansion through strengthening the enabling environment, supporting greater financial inclusion, and ensuring economic opportunities are more sustainable and equitable.

USAID’s work with civil society and media will focus on reforms that will incentivize progress across CDCS objectives. These efforts will also help create the building blocks for increasing commitment and enabling the Government of Liberia (GOL) to take over greater responsibility for financing and leading their own development needs. USAID will work with the GOL to strengthen health and education systems, and, simultaneously, work with the private sector to provide more options in the health and education sectors where current service delivery is lacking. Together, this will increase citizen capacity to be productive members of the workforce, engage as citizens, and improve livelihoods.

B. Commitment and Capacity

Self-reliance, including Liberia’s ability to fund its own development, is contingent upon a functioning economy and the availability of a capable workforce to support economic growth.

With the growth forecast for 2019 at 0.4 percent and inflation at 28 percent by the end of 2018, economic growth is a central challenge, with living standards and economic opportunities in decline. Liberia has an even greater imperative to grow its economy in a fair and equitable manner given its large and growing youth population. To address this critical need and area of opportunity, the CDCS goal focuses on private sector-led economic expansion, with youth as a cross-cutting focus area throughout. Weak governance and corruption underlie many of Liberia’s challenges, including economic growth. Liberia ranks low in government effectiveness, The USAID Country Roadmap for fiscal year 2019 (Annex A) is an analytic tool that visualizes each country's overall level of self-reliance and performance on each of 17 indicators; scores are on a 0-1 scale, relative to all countries in the world.

including revenue mobilization, and was recently ranked 120 out of 180 in Transparency International’s Corruption Perception Index. These challenges also translate into the delivery of public services. For greater self-reliance, the GOL must capture more revenue and channel it into productive investment and the delivery of essential services. As such, catalyzing reform is another fundamental component of the CDCS goal.

Liberia will need to specifically support women and youth to reach the country’s full potential. Currently, Liberia’s Gender Inequality Index (GII) value is 0.656, ranking at 154 out of 160 countries in the 2017 index. This means that women have less representation and less education and comprise a smaller portion of the workforce. Child health ranks at 0.41 on the roadmap, and under-five mortality rates are among the five highest in the world. Education is similarly dire, with a secondary school completion rate of 4 percent and 51 percent of the teachers and administrators who failed the national teacher testing exam in 2017. Economic growth depends not only on a vibrant private sector as a source of employment but also on a capable, productive and equitable labor market. Developing Liberia’s human capital through better access to health and education services is an area of great need, and the third pillar of the CDCS goal.

A promising area for continued engagement is with civil society, specifically through the professionalization of the Civil Society Organization (CSO) and media sectors. Liberia has a robust print media and many very active radio stations. Although media struggles with content quality, fair and unbiased information dissemination, as well as censorship and intimidation, civil society as a whole is quite vocal and utilizes multiple avenues to voice their concerns. Since the missing money scandal2 and economic decline, there have been frequent but peaceful protests.

The GOL continues to speak out in favor of freedom of speech. Additionally, Liberia’s youth are also active in political participation. Liberia is ranked high at 17 out of 183 countries globally in the Youth Development Index on political participation. Capitalizing on this civic vibrancy will drive the new opportunities outlined in the CDCS. In sum, there exist many pathways for engaged citizens to serve as a counterpoint to ensure constructive change, and the accountability and transparency of their government.

C. Strategic Choices

Liberia’s low level of capacity on the country roadmap indicates a high level of need across the board. The slightly higher— but inconsistent— levels of commitment indicate a need for USAID to do business differently to ensure mutual accountability and commitment to ensure sustainable results. USAID/Liberia will therefore ensure that all collaboration with the GOL is contingent upon their commitment and, where possible, will utilize results-based programming.

While continuing strategically targeted work with the GOL, USAID will also make a concerted pivot towards more engagement with civil society, the private sector and citizens writ large, in particular youth and women. The private sector engagement will build on existing partnerships and loan guarantees, and expand these efforts with a suite of other tools, in close coordination with the new U.S. International Development Finance Corporation. By broadening engagement with the private sector and civil society, USAID will help change the nature of the GOL-USAID relationship from one of dependencies to one directed towards self-reliance.

2 Independent Review Report prepared by Kroll Associates Inc., “Kroll Missing Currency Report” (February 2019);

https://www.usaid.gov/liberia/newsroom/missing-currency-report (Accessed on May 31, 2019) https://www.usaid.gov/liberia/newsroom/missing-currency-report https://www.usaid.gov/liberia/newsroom/missing-currency-report

ID/Liberia will foster self-reliance by spurring private sector led economic expansion through a focus on catalyzing reforms and cultivatin a health , roductive and educated workforce.

Cross-Sectoral Accelerators:

• Investments in children's early years will boost their readiness for long-lasting future success

Youth leadership, gainful employment, use of /CT, and contribution will transform Uberio's economy and society Installing robust ontkorruption measures will increase efficiencies, social cohesion to accelerate job creation and economic growth Increased gender equality will improve Liberia's productivity and reduce harmful practices including GBV and TIP

D01: Market-driven, Inclusive Economic Growth Supporting Increased Job Creation

D02: Effective and Inclusive Governance Catalyzed through Reforms and Greater

Accountability

D03: Foundation for Growth Strengthened through a Healthy, Productive, and

Educated Population

IRl.1:Private sector enabling ~ environment improved for greater investment

IRl.2: Commercial agricultural sector strengthened, especially for women and youth

IRl.3: Natural resources

- sustainably, equitably and productively managed

• RF for USAID/Uberia CDCS 2019~2024

I

I

IR2.1: Diverse political leaders and active cit izens cult ivated to protect and promote Liberian interests

IR2.2: GOL empowered and incentivized to deliver quality public services

IR2.3: Civil society and media enabled to advance reforms and accountability

1. - . - . - . - • - . - . - . - . - . - . - . - • - . - .

IR 3.1: Quality of health, HIV, nutrition and WASH services improved

IR3.2: Healt h, nutrition, and WASH syst em s at national and sub-national level strengthened

IR3.3:Quality of education services improved

IR3.4: Equitable access to learning increased

IR3.5: Foundational rights and access to public services for all Liberians increased

USAID will also have a new focus on foundational rights for vulnerable populations to access services, identifying and acting on opportunities and ensuring a do-no-harm approach.

One potential area of focus is on Trafficking in Persons (TIP). Liberia is on the precipice of being downgraded to the USG TIP Tier 3. The GOL has demonstrated some commitment to address this issue through increased ability to prosecute perpetrators, hold public awareness campaigns and has an updated national action plan. The TIP Interagency Working Group is developing a plan which will holistically address TIP issues and help to move Liberia off the Tier 2 Watch List.

Progress on the journey to self-reliance requires new approaches to USAID’s portfolio.

Success necessitates vigorous collaboration and more intentional engagement across programs and sectors. The new strategy recognizes the inter-relationship between sectors, in that economic growth and job creation depends on strong governance and human capital development.

Similarly, human capital provides the manpower and leadership necessary for a self-reliant country. This model is reflected in the Results Framework graphic below.

Journey to Self-Reliance

Harnessing the talents of Liberia's young leaders.

The Future: If the government of Li beria (GOL) can take steps that are commensurate with the will and desire of Liberia 's young population, then sustained economic growth can become a reality_

Current: The median age of the populati on is 17_5 years_ The focus of the

... .._._ ._ new strategy will be capitalizing on the youth demographic dividend to shape the future_

The Past: The Ducor Hotel was once the crowned jewel of West Afri ca, but it now stands as a stark reminder of what Li beri a once "was" and the potenti al for what Liberia "can be"_

II. Country Context

A. Salient Factors in Country Context

The United States has enjoyed a long and enduring relationship with Liberia. This relationship has remained strong throughout the Ellen Johnson Sirleaf administration and into the George Weah Administration, the first democratic transition since the Liberian Civil War. The 2018 peaceable transition of power and the conclusion or the UN Mission in Liberia (UNMIL) reflect a growing confidence in the ability of Liberia and regional actors to maintain peace in Liberia. USAID has made important gains toward establishing democratic order and putting in place those institutions critical to long term prosperity and security.

Progress was threatened by the 2014-2015 Ebola Virus outbreak. The crisis exposed the vulnerabilities of government institutions, as well as the economy, to unexpected shocks. This was especially true for the Liberian health system, as fatalities created a dearth of trained health care workers and teachers. Nationwide quarantines closed healthcare facilities and schools, further weakening these already vulnerable institutions. With the outbreak halted and through donor assistance, health and education services are just now recovering.

B. Capacity of the Economy

As the Country Roadmap (Annex A) clearly indicates, with GDP per capita of .06 and a poverty rate of .07 on a scale of 0 to 1, economic growth is a major challenge for the achievement of self-reliance. The economic growth forecast for 2019 was revised down to 0.4 percent from a projected 4.7 percent. With accommodative monetary policy meeting fiscal needs, the exchange rate depreciated by 28 percent and inflation grew to 28 percent by 2018 year-end. This has caused the living standards of most Liberians who earn and spend primarily in Liberian dollars to decline. The deteriorating economic situation threatens the success of the widely acclaimed Government of Liberia’s (GOL) 2018 Pro-Poor Agenda.

Liberia’s economy depends on primary commodities that do not contribute to broad based employment; for example the Foreign Direct Investment-laden and export-oriented mining sector employs only 2 percent of the workforce. Formal employment comprises just 20 percent of the labor force, with subsistence agriculture and informal services as the main source of employment. The agriculture sector grew at only .08 percent from 2013 to 2018. With 70 percent of the population under the age of 30 and a population growth rate among the highest in the world (2.5 percent), Liberia has an even greater imperative to grow its economy in a fair and equitable manner or face increased instability.

C. Government Capacity

Weak governance and rampant corruption underlie many of Liberia’s challenges, especially economic growth. Liberia ranks low in government effectiveness (0.24 on the roadmap), including revenue mobilization (0.25 on the roadmap for efficiency of tax administration), and was recently ranked 120 out of 180 in Transparency International’s Corruption Perception Index.

The GOL also struggles with the delivery of public services. The fiscal deficit is projected to increase to 5.2 percent of GDP in 2018, and more than half of the GOL budget is foreign-funded, not a sustainable self-reliance path. For Liberia to reach its growth potential, the GOL must capture more revenue and channel it into productive investment and the delivery of essential public services. More than 50 percent of Liberia’s land area is under commercial agriculture and mining concessions, but provides little tax revenue. Capturing more concession revenue, while critical, has proven elusive and limits broader benefits to the public due to the GOL's current approach to structure concession agreements. Communal property rights are also a longstanding issue. A landmark Land Rights Bill was passed in 2018, but implementation is complex with capacity and commitment issues adding to the difficulties.

In August 2018, media reported that LSD 15.5 B of newly printed currency was missing.

An uproar ensued, with Liberians demanding an explanation from the GOL. In response, President Weah launched a GOL investigation and also requested USG assistance in conducting an independent investigation. Reports released in February 2019 by the Presidential Investigative Team and the USAID-sponsored Kroll investigation point to a need to step up efforts to: 1) strengthen the efficiency of government spending with an emphasis on monitoring, accountability and transparency; 2) improve operational policies, guidelines and compliance especially around procurement actions; and 3) enhance anti-corruption efforts. The “missing currency” investigations and subsequent recommendations open a window of opportunity to build on the GOL’s willingness to engage the donor community, especially USAID, to develop its capacity to implement those strong policy actions required to engage with the private sector to right the trajectory towards self-reliance.

D. Civil Society Capacity

A promising counterweight to low GOL capacity and commitment is civil society–one of the bright spots on the roadmap, with a score of 0.90 for civil society and media effectiveness.

Yet independent media and civil society continue to face numerous challenges, e.g. in financial and institutional sustainability, journalistic professionalism, and a lack of mechanisms for holding public institutions accountable. Media especially faces periodic self-censorship and intimidation, while citizens, especially in rural areas, lack widespread access to information and therefore do not have the means to understand and monitor their government. Thus, while civil society is vocal, this does not always translate into effective change.

USAID/Liberia is well poised in the new strategy to direct its efforts towards increasing CSO and media professionalization and sustainability, and positioning them as channels for which citizens can become informed and mobilized to exert influence in GOL decision making and accountability structures. In addition, Liberia’s youth are notably active – Liberia is ranked 17 out of 183 countries in the Youth Development Index on political participation, which was clearly evident in the recent election. Unfortunately, today many youth are growing disillusioned from unfulfilled promises and lack of true participation in shaping the country’s future. Instead of becoming Liberia’s future, youth could become a source of instability if they do not have appropriate channels to articulate their aspirations and grievances.

E. Human Capital

Economic growth depends on not only a vibrant private sector as a source of employment but also a capable and productive labor market. It requires not only an educated and healthy workforce but also an investment in workforce replenishment through the provision of health services and education for children who will constitute tomorrow’s labor force, addressing the needs of girls in particular.

Liberia has a Gender Inequality Index (GII) value of 0.656, ranking it 154 out of 160 countries in the 2017 index, which reflects gender-based inequalities in three dimensions– reproductive health, empowerment and economic activity. This means that women have less representation, less education, less opportunity and therefore, comprise a smaller portion of the formal workforce.

Child health ranks at 0.41 on the roadmap, and under-5 mortality rates are among the five highest in the world. The maternal mortality rate is 1,072 per 100,000 live births compared to 546 for sub-Saharan Africa. Malaria affects over 40 percent of children and stunting over one-third. Health outcomes are further exacerbated by the loss of 8-10 percent of the country’s healthcare workers during Ebola and the collapse of the healthcare system and its ripple effects on education.

There is no data for education in the Roadmap, but existing data are stark. The secondary school completion rate is 4 percent, the purported youth literacy rate of 49 percent is inflated and 51 percent of the teachers and administrators failed the national teacher testing exam in 2017, with 6 percent categorized as functionally illiterate. This creates a vicious cycle of illiteracy. In addition, not only do children come to school hungry, they have low attendance due, in part, to sickness, which further hampers the learning process. Young girls drop out due to early pregnancies, reducing their chances for moving into the skilled workforce.

Despite all of the challenges they face, the youth dividend in Liberia presents an opportunity. School-age children are the first generation in 30 years who have not grown up under the civil war, likewise, children beginning their schooling now are too young to remember the horrors of Ebola.

G. President Weah’s 2018 Pro-Poor Agenda for Prosperity and Development (PAPD)

Agenda for Prosperity and Development

111. Sustaining the Peace

Result: Economic Expansion andJobs

2019-2024 CDCS Pillars

Shortly after the Weah administration was sworn in, the PAPD was rolled out. As shown in the graphic below, the new 2019-2024 CDCS aligns directly with three of the four pillars of the GOL’s PAPD and strongly supports the fourth pillar.

DO 1 aligns with Pillar II— Economy and Jobs: creating more and better-quality jobs that are germane to sustaining the peace and future economic growth. (Roadmap sub-dimensions: Economic Policy; Capacity of the Economy)

DO 2 aligns with Pillar IV— Governance and Transparency: effective implementation of policies and strategies that will ensure the participation of the entire citizenry in decision making and empowers all groups. The achievement of this goal hinges on major governance reforms in political and economic arenas. (Roadmap sub-dimensions: Open and Accountable Governance, Government Capacity)

DO 3 aligns with Pillar I— Power to the People: empowering people with the wherewithal to take control of their lives by providing access to quality education, ensuring access to essential healthcare and increasing opportunities to attain a decent standard of living.

Additionally, the CDCS’s overarching focus on civil society and citizen engagement supports empowering people. (Roadmap sub-dimensions: Inclusive Development, Citizen Capacity)

All three DOs will enhance Pillar III— Sustaining the Peace: promoting a peaceful, unified society that enables economic transformation and sustainable development. As the PAPD highlights, greater economic opportunity, effective and inclusive governance and investments in developing human capital directly support social cohesion and reconciliation leading to sustain peace and stability.

H. Country Roadmap & Transition Planning

Liberia is far from the end goal of achieving self-reliance. Both capacity and commitment are at low levels, with capacity significantly lower. Setting the foundations for transition will be a long-term effort in Liberia. It will depend above all on improving the foundational aspects of society— health and education and inclusive economic growth that specifically enables the growing youth population to invest in their country. However, while economic growth is a necessary condition for self-reliance, it alone cannot ensure commitment to principles and practices that are necessary for equitable socio-economic development. Setting the foundation

CDCS Parameters & J2SR Framework

Market-Driven Inclusive Economic Growth:

Translation to job creation especially for women and youth U SAID/Liberia

CDCS 2019-2024

Self Reliance via

Economic Expansion

Catalyzing Reform:

A close coordination with GOL and civil society , especially on land tenure, supply chain, governance, transparency, and accountability

Foundation for Growth:

A healthy, productive, and educated population with foundational rights for all for self-reliance will require increased entrepreneurship, quality education and health services, and increased GOL ability to finance its own development.

This CDCS period will focus on complementary elements of a longer-term self-reliance trajectory— supporting the necessary investments and capacity for sustained and inclusive growth to enable the emergence of a more robust economy and promoting the necessary GOL reforms and commitment to make sustained progress possible. If progress is made on economic growth, and the increase in public resources that results is productively used by the GOL, then, over the long term it will decrease the need for donor investments on the foundational aspects of development, i.e. health services and education.

DO 1: Market-Driven Inclusive Economic Growth focuses on the core of this effort— market-driven, inclusive economic growth. So far, limited economic growth has not translated into job creation for Liberia’s growing population, especially women and youth. Therefore, inclusive market-driven growth initiatives will be explored and promoted in the new strategy.

USAID will focus efforts on the key interventions to support the emergence of a stronger economy with benefits across society. It will also entail focusing on the prerequisites for sustainable growth, including land rights and more transparent and equitable governance of the country’s natural resources. This will provide citizens and the GOL more opportunities to contribute to the countries' economic growth and help build a more inclusive and robust private sector. During and beyond the strategy period, this will be an important catalyst in ongoing growth and eventual transition.

DO 2: Catalyzing Reform will focus on GOL commitment and capacity, including engagement with the GOL to develop and implement reforms, effectively generate and allocate resources, and deliver services to the Liberian people. Work through this DO will also place a greater emphasis on strengthening the capacity of CSOs and media outlets to exercise advocacy and oversight functions. While these are long-term efforts, engaging in the necessary work to improve governance will pay off throughout this strategy period, and help create the incentives for greater self-reliance now and in the future.

DO 3: Foundation for Growth will support establishing a healthy, productive and educated population. Given current needs in Liberia, these are essential investments to ensure a healthy and productive workforce. Work throughout DO 3 will build capacity and commitment, including through better public financial management of government resources and investments in service delivery, anticipating the day when Liberia will take greater ownership of these responsibilities to their citizens, a key element of eventual self-reliance.

III. Strategic Approach

The 2019-2024 CDCS goal is: USAID/Liberia will foster self-reliance by spurring private sector led economic expansion through a focus on catalyzing reforms and cultivating a healthy, productive and educated workforce. Its three highly-interdependent pillars address the areas of greatest need: 1) Market-driven inclusive economic growth that translates into job creation, especially for youth and women; 2) Effective and inclusive governance catalyzed through reforms and greater accountability; and 3) Foundation for growth strengthened through a healthy, productive and educated population.

This strategic approach is closely linked to, and informed by, the country roadmap for Liberia. Liberia’s low level of capacity on the country roadmap indicates a high level of need across sectors. Levels of commitment are only slightly higher, and inconsistent, indicating a need for USAID to adopt a new approach that ensures mutual accountability and commitment to sustainable results. The mission intends to build upon previous efforts of rebuilding from civil war and recovery from the Ebola crisis, to move into a new phase focused on economic growth and a strong foundation of education and health. The Mission will continue to pursue policy reforms that will enable private sector engagement in the country and a strong civil society that will help propel government reforms and policy implementation.

Collaboration with the GOL will be based upon their commitment and, where possible, will utilize result-based programming. In its continuing efforts to support Liberia’s journey to self-reliance, the Mission will focus on efforts to expand the country’s ability to finance its self-reliance, expand private sector engagement and redefine its relationship with the GOL toward these ends.

In an effort to support Liberia’s ability to finance its journey to self-reliance, USAID has been working with the GOL to increase its capacity to mobilize resources. Through the Mission’s Domestic Resource Mobilization activity, this increased revenues by 18 percent. In addition, legislative reforms and support related to decentralization and land governance have made significant progress in 2019 supporting both an enabling environment for private investment and fiscal transparency. The Mission has also engaged the GOL in strengthening Public Financial Management. Finally, the Mission is introducing new financial tools (e.g.

Development Credit Authority guarantees) as part of its efforts to build a viable financial sector.

Taken together, these efforts will help enhance the ability of the GOL to finance self-reliance efforts. The Mission will assist the GOL in determining the proper balance of financial resources needed to increase the capacity to generate and manage greater sums of public revenue and improve commitment to ensuring that these resources are managed and dispersed in an accountable, transparent and effective manner.

This strategy’s strong focus on market-driven economic growth will necessitate a strong role for the private sector. The private sector’s financial resources and expertise in market-based solutions have the potential for achieving scale and sustainability in Liberia that is critically needed for tackling societal challenges. While private sector engagement opportunities in Liberia are nascent and few, the Mission intends to use its existing strong in-country networks and relationships to find opportunities to expand private sector engagement initiatives. These efforts will build on past success in Liberia where USAID has engaged early in ICT and other sectors during its response to Ebola; numerous lessons were learned and evidence collected regarding what engagements may be most fruitful in Liberia. This will be further supported by enhancing the enabling environment for private sector engagement and using its position to convene actors in potential private sector engagements. There is also the opportunity to capitalize on private sector engagement by building on the GOL’s recent commitment to create Special Economic Zones (SEZ) to stimulate the economy. The strategy also seeks new opportunities for private sector engagement, most notably, in the health and education sector.

While Financing for Self-Reliance (FSR) and Private Sector Engagement (PSE) strategies are critical elements to Liberia’s Journey to Self-Reliance, even more critical is the need to redefine the relationship that the Mission has with the GOL. While this relationship has been positive in numerous respects, it is time to begin to move the GOL towards the self-reliance trajectory. One approach is to re-evaluate what is asked of our GOL counterparts in terms of cost-sharing. If the IMF program is launched and begins to have an effect, the Mission expects that the relationship with the GOL will shift more towards a more defined self-reliance trajectory. Another is to continue to provide strong governance reform guidance and the policy implementation support necessary to accelerate the trajectory. The new strategy also considers how to hold both the GOL and USAID equally accountable for results. The Mission will pursue numerous avenues to both incentivize commitment and strengthen capacity. USAID will engage the GOL in a policy dialogue on its economic framework and the reforms needed to continue to ensure economic health and expansion. These efforts will be further reinforced by working to enhance civil society in Liberia to act as a balance to government efforts by ensuring accountability and providing advocacy for needed changes. USAID will continue to work through and strengthen donor coordination across all sectors to ensure unified and coordinated responses to GOL needs and requests.

The development needs in Liberia remain great and the country’s journey to self-reliance will extend beyond the duration of this strategy. In order to maximize USAID’s investments, the strategy focuses on the six central counties of Liberia that represent the majority of the population (Montserrado, Margibi, Lofa, Nimba, Bong, and Grand Bassa). This geographic focus allows USAID to target its development efforts to affect the greatest number of people in Liberia. This purposeful focus facilitates donor coordination to reduce overlap and duplication.

The goal is to build development assistance synergy that maximizes results. The strategic approach presented here will enhance an already strong partnership with the GOL.

Goal USAID/Liberia will foster self-reliance by spurring private sector led economic expansion through a focus on catalyzing reforms and cultivating a healthy, productive and educated workforce .

Liberia's Self-Reliance Priorities

Domestic Resource Mob1hzat1on (J2SR Roadmap Sub d1mens1on Government Capacity)

Improved Economic Policies (J2SR Roadmap Sub d1mens1on Economic Policy)

Governance and Accountability (J2SR Roadmap Sub d1mens1ons Open and Accountable Governance/Government Capacity)

Human and Institutional Capacity Development (J2SR Roadmap Sub-d1mens1ons Govt , C1t1zen, C1v1I Society

Capacity)

Systems Strengthening (J2SR Roadmap Sub d1mens1ons Govt , Citizen Capacity)

Liberia's CDCS Development Objectives

Market-driven 1nclus1ve economic growth supporting Job creation inc reased

- Effective and inclusive

• ~ governance catalyzed through reforms and realer accountab1h

IV. Results Framework

A. Goal Statement & Narrative

The 2019-2024 CDCS goal is: USAID/Liberia will foster self-reliance by spurring private sector led economic expansion through a focus on catalyzing reforms and cultivating a healthy, productive and educated workforce. Its three highly-interdependent pillars, shown below, address the areas of greatest need: 1) Market-driven inclusive economic growth that translates into job creation, especially for youth and women; 2) Effective and inclusive governance catalyzed through reforms and greater accountability; and 3) Foundation for growth strengthened through a healthy, productive and educated population.

This strategy is directed towards the three weakest sub-dimensions of the country roadmap: capacity of the economy (not including export diversification, which is misleadingly high due to data distortions); government capacity and citizen capacity. Economic policy, along with, open and accountable governance are other areas that received mediocre scores on the roadmap and are addressed in this CDCS. Despite critical weaknesses, the civil society and independent media factors stand out on the Roadmap and USAID/Liberia will pivot to leverage and bolster this area of opportunity in the efforts under this CDCS.

B. Development Objective (DO) & Intermediate Results (IR) Narratives

DO 1— Market-driven, inclusive economic growth supporting increased job creation

Development Hypothesis Statement: If the business climate and infrastructure of the country is improved, the agricultural sector is better supported for increased productivity, and natural

1.1 Private sector enabling

environment improved for greater investment

IR 1.2 Commercial agriculture sector strengthened , especially for women and y outh

Macro Assumptions :

IR 1.3 Natural resources sustainably, equitably and productively managed

1. GOL co mmits to infrastructure and public servi ce upgrades .

2. GOL undertakes macro-economic reforms.

3. Increase in foreign direct investment.

4. Concess ionary and state-owned enterprise reforms.

Relevant Seff-Reliance Metrics

Commitment:

1. Business Environment

2. Biodiversity and Habitat

Protection

3. Trade freedom

Ca pacity:

1. ICT utilization

2. GDP/Capita

3. Export Concentration resources are sustainably managed, then private sector investment, livelihood opportunities and inclusive economic growth will be increased.

Development Hypothesis Narrative: Given the current state of economic stagnation and the high level of basic needs in Liberia, the strengthening of self-reliance cannot be achieved without a substantial increase in capacity, resources and employment. This requires a broad-based inclusive economic development approach that enables a growing population, especially women and youth, to find opportunities for entrepreneurship and employment. For this to happen, economic growth needs to span multiple sectors and be more inclusive for broader economic participation and social benefits. There is a need to move away from unsustainable and exploitative economic approaches from the past, while still recognizing the importance of agriculture, fisheries and other economic activities upon which livelihoods rely.

Economic growth is the central development challenge facing Liberia and the overarching focus of this CDCS. The approach under DO 1 is multi-dimensional. There is a concerted effort to move to a cohesive framework that promotes broad-based sector-level growth, more intentionally involving stakeholders throughout the process to ensure sustainability, developing private sector partnerships and leveraging other donor resources. More and better job opportunities that harness the youth dividend and bring both youth and women into the formal economy is the main thrust. USAID will make efforts to ensure greater inclusion of traditionally marginalized groups for inclusive economic growth that reduces poverty (e.g.

different ethnicities, women, people with disabilities and youth). These efforts can open up alternatives to the opaque model of Chinese investment and extraction. There will also be a greater focus on ICT with a specific focus on increasing internet connectivity and expanding mobile money.

Several lines of effort are long-term macroeconomic investments, which serve as the backbone for a more prosperous future, while others at the micro-level will improve livelihoods in the short-term along with increased economic opportunities, such as job creation. Both are expected to fuel economic growth. To provide the basis for growth, USAID will work on macro-economic policy reforms. These reforms will also enhance private sector investment by reducing trade barriers to investment, supporting infrastructure development and developing an SEZ in concert with the government and other donors. The GOL has created a steering committee composed of GOL representatives and four donors to guide the SEZ development process. As the SEZ evolves, USAID will ensure the GOL takes steps commensurate with USAID’s investments and will collaborate with other donors and civil society to help hold the GOL accountable. Committed GOL and presidential involvement will be essential for the success of this effort. To date, the GOL has demonstrated a commitment as a convener in this effort and has designated land for the SEZ site. The close USAID/GOL coordination on the SEZ highlights a real-world implementation example of USAID’s strategic alignment with the PAPD’s Pillar II— Economy and Jobs by creating more and better-quality jobs that are germane to future economic growth and sustaining the peace. The GOL’s prioritization of economic policy under the Pillar II will also complement USAID’s newly planned Policy Dialogue activity that will be implemented under this strategy. To expand opportunities, USAID will support the growth of existing medium and small enterprises and promote increased agricultural productivity by growing market linkages for subsistence farmers, many of whom are women.

Under DO 1, USAID will also focus on more sustainable natural resource management and a wider-range of their use, including natural resource enterprises. Much of Liberia’s economy is derived from unsustainable exploitation of natural resources, with little actual economic return, a phenomenon commonly referred to as the resource curse. USAID’s efforts will focus on reversing this trend and ensuring that future economic growth and private sector investment do not negatively impact Liberia’s natural resources. These efforts also provide a counterbalance to China’s intense interest to assume control over Liberia’s natural resources, as well as remove pressure from Liberia’s natural resources by generating economic alternatives in, for example, the agricultural sector.

Assumptions:

● GOL commits to infrastructure and public service upgrades.

● GOL undertakes macro-economic reforms.

● Increase in foreign direct investment.

● Concessionary and state-owned enterprise reforms.

Risks:

● Political risks including challenges with proper governance.

● Shifting GOL priorities due to elections (transfer of political power).

● Climate change effects on the land, ocean and infrastructure.

● Pandemic/Outbreaks will negatively affect economic growth.

● Civil unrest caused by disaffected youth and workers.

● Macroeconomic risks (e.g. world market commodity price reductions; inflation; foreign exchange risks).

● Culture of rent seeking creates an opportunity cost of not seeking added value for economic growth.

IR 1.1— Private sector enabling environment improved for greater investment.

IR 1.1 serves as a foundational element of USAID/Liberia’s economic growth strategy.

Evidence from the economic growth sector indicates that USG assistance is best delivered in conjunction with GOL reforms. Inclusive economic growth that fosters job creation is not possible without a strong private sector enabling environment. This begins with policy reform. In order to support the GOL’s PAPD and sustain long-term government commitment, specific investments will be needed to improve policy-making capacity within the GOL while simultaneously reforming targeted economic policies. These policy reforms will be centered upon trade facilitation, import policies, concessions and the development of an SEZ to improve the overall business climate, increase domestic revenues and to support job creation leading to private sector growth. Programs will also address women's barriers to economic empowerment.

Their contribution is crucial to more sustainable and inclusive prosperity, as it relates to livelihoods, trade and infrastructure.

USAID’s policy and regulatory reforms will support a competitive non-rentier private sector through an inclusive and sustainable process. Currently, concessions, awarded via processes that lack transparency, govern the exploitation of natural resources. A lack of secure property rights discourages sustainable investments in agriculture and natural resources. USAID’s policy initiatives will diversify the Liberian economy away from concession-based primary commodities (iron ore and unprocessed rubber and palm oil) and into other primary and higher value-added agricultural products where Liberia can compete both in export markets and in the domestic market vis-à-vis imports. These efforts will help unlock commercial agriculture investments and sustainable natural resource management production.

In order to spur greater investment in the country, concerted efforts will be made to strengthen financial markets to increase the utilization of banking services and other formal financial institutions. In addition, targeted infrastructure support will provide basic services such as electricity, clean water, internet connectivity and improved roads with the intention of expanding opportunities for existing formal and informal small and medium enterprises. Finally, given the importance of job creation, there will be an intentional effort to engage women and youth across all facets of the economic growth spectrum to ensure non-discrimination in key value chains and human resources management policies. USAID’s approach to increase economic opportunities for women will also take into consideration women’s vulnerability to external economic shocks due to the fact that women’s labor is concentrated in the informal economy in two sectors: 90 percent of women work either in sales and services or in the agriculture sector according to the 2013 Demographic and Household Survey (DHS).

The GOL, as part of its PAPD, supports reforms for sustained economic growth. GOL commitment is stronger than its capacity to increase macro-economic stability in the country.

The GOL understands that an improved private sector development policy, regulatory and institutional framework is needed to ensure long-lasting economic growth. Thus, there appears to be some level of GOL commitment to reduce barriers to trade, increase competitiveness in the business regulatory environment and leverage foreign relations for greater regional integration.

USAID/Liberia will strengthen the policy analysis capacity within the GOL through strategic partnerships with civil society and well-established policy think tanks. Private sector actors within the formal and informal banking sector will be vitally important to unlock investment and improve financial inclusion through partnership. Finally, bilateral and multilateral donor coordination within the economic enabling environment will be crucial towards sustaining GOL commitment.

The evidence base of this IR has been drawn from past works in the areas of trade, private sector investment and workforce development. These studies include desk reviews on the current economic environment in Liberia. Numerous USAID and external studies were also reviewed in this process. GIS data collection and analyses from the 2016 Household Income and Expenditure Survey, the Millennium Challenge Corporation’s Constraints Analysis, and the World Bank’s 2018 Strategic Country Diagnostic provided additional perspectives. Finally, the USAID supported Liberia’s Development Conference Anthology3 provides a synopsis of empirical studies that highlight policy recommendations for the GOL.

IR 1.2— Commercial agriculture sector strengthened, especially for women and youth.

Given its potential for economic growth and job creation, agriculture will be a significant focus of DO 1. While there is sufficient arable land in Liberia, its cultivation remains underdeveloped. The strategy aims to take steps to cultivate land with the available excess labor capacity. The strategy will continue its focus on farmers and agro-entrepreneurs in the rice, cassava and vegetable sectors in the target counties of Bong, Lofa, Nimba, and Montserrado. The strategy will aim to improve access to markets through value chain development, improved agricultural infrastructure, and the diversification of more nutritious, high value agricultural products. According to USAID/Liberia’s Gender Analysis (2018), approximately 40 percent of the female workforce is engaged in agricultural work that is, growing and selling agriculture products. USAID/Liberia’s programs will collaborate closely across other DOs to address the three key constraints to Liberian women’s empowerment in agricultural work: security of land tenure; lack of access to credit; and low literacy rates. For these reasons, the new strategy will have an increased emphasis on women and youth by expanding their contribution to the agriculture value chain.

This IR aligns with the GOL’s intent to increase competitiveness in the agricultural, fisheries and forestry sectors as laid out in the PAPD and Liberia Agriculture Sector Investment Program (LASIP). The government recently passed legislation regarding land tenure rights which may help to facilitate efforts in this IR. Among the potential partners in this area is Sweden (SIDA), which supports value chain strengthening and agriculture markets in Liberia.

The evidence base of this IR has been drawn from past works in the areas of food security, trade and agriculture value chains. Among these studies are three performance evaluations (Liberia Agribusiness Development Activity (LADA); Smallholder Oil Palm Support Project; FED final report). In addition, studies such as the Cross Border Trade and Food Security and the Liberia Market Study: Enabling Agricultural Trade provide additional insights into development opportunities in this sector. Finally, empirical evidence is drawn from the Development Conference Anthology4.

IR 1.3— Natural resources sustainably, equitably and productively managed.

Liberia is endowed with natural resources and suffers from the resource curse, which is a result of an opaque and outdated concession system that concentrates the benefits and wealth to a

3 Liberia’s Development Conference Anthology: Engendering Collective Action for Advancing Liberia’s Development (2017). The Anthology provides a tangible synopsis of policy prescriptions that can inform the design and implementation of national development strategies in Liberia.

4 IBID

small number of people. As a result, current practices are not sustainable nor do they permit equitable production that benefits all Liberians. Future work must move away from the unsustainable and exploitative approaches of the past, while still recognizing the importance of the economic activities related to natural resources management upon which livelihoods rely.

USAID/Liberia will work on improving natural resource management systems and strengthening sustainable natural resource enterprises. Finally, the Mission will continue to capitalize on recent land reform in Liberia by improving the land tenure system for equitable natural resource management. Access to land particularly for women will be a specific consideration in these efforts. The role of land and natural resources as a source of potential conflict in Liberia will be carefully monitored.

The GOL policy regarding natural resources is to ensure sustainable management and the use of environmentally sound and renewable practices, including disaster risk reduction and adaptation to climate change. There are numerous partners also working in this domain to ensure the proper management of forestry and other natural resources. The World Bank is supporting Liberia to align with a worldwide forestry strategy called Reduced Emissions from Deforestation and Forest Degradation. The European Union is funding the Voluntary Partnership Agreement, which is a comprehensive governance and verification system to control, monitor, and license legal timber. The FAO, Flora & Fauna and Conservation International organizations are contributing to natural resource conservation in Liberia.

The evidence base of IR 1.3 was drawn from past works in the areas of natural resource management, biodiversity and forestry. Among these studies are two performance evaluations:

The Forest Incomes for Environmental Sustainability (FIFES) Midterm…