Why it is Catch-22 for Liberia's development hopes

President Johnson Sirleaf – who won the Nobel Peace Prize in 2011 – has won praise for her efforts to get Liberia’s national debt written off. Liberia's President Sirleaf has won praise for trying to get the national debt written off

Related Stories

When BBC Radio 4's Today programme embarked on its plan to "adopt" Liberia as a country, I seem to remember my colleague and fellow presenter John Humphrys asking an important question about the country: why is it that progress towards development there is so slow?

He was right to raise it.

After all, the instability and civil war that completely managed to wreck the country over a 23-year period are over. There is a competent president in post, aid is pouring in, and the debt hanging over the country has been written off.

And yet for many people in Liberia, conditions are still medieval. Many people are living on incomes of $5-10 (£3-6) a week, there are only about 100 or so doctors in the country to look after the 3.5 million people there, roads are pot-holed and only a small percentage of the population have access to electricity.

Yet, what is so striking about Liberia is that in a place where there is so much to be done, I have never seen so many people with nothing to do.

More than 80% of the workforce is unemployed (if the concept can be meaningfully measured at that kind of level). All over the country, at all times of the week, you see people just hanging out. Young men sitting astride their mopeds (there are plenty of them around as young veterans of the war were given the money to buy mopeds to encourage them to hand in their weapons).

Children selling low-value goods at the roadside are a familiar sight in Liberia Children selling low-value goods at the roadside are a familiar sight

Or you see children and women on the sides of streets or in bustling markets hopelessly under-worked engaging in low value retail activities.

One boy told me that if he wanders around for half a day, he can sell about 12 packets of biscuits. That is a lot of work for a child in return for very little income.

Think how much more productive everybody could be with some well-organised tasks, some decent management and a bit of equipment.

Which brings us back to the John Humphrys question.

Why does that kind of development not occur? Why does Liberia not take off? Why does it not become a tiger economy following the model of others from Europe and Asia to the Americas, which heaved themselves out of the poverty of subsistence agriculture by opening factories?

After all, manufacturing quickly makes relatively unskilled workers very productive indeed. In principle, Liberia should be highly attractive to employers with wage rates there at about $5 a day in the formal sector of the economy, making them about a fifth of those in the most industrial parts of China.

Liberia's President Sirleaf: The fundamentals are in place

Having spent an intensive week in the country (a ludicrously short time to start pontificating on it, I admit) I came to think I had a not very original answer to that Humphrys question. So let me set it out here.

It all comes down to the many different Catch-22s of development. Let me give you an example of the sort of thing I mean. For industry to settle in a country, you first need electricity; for electricity, you need some trained workers; for trained workers, you need some schools; for schools you need some money; for money, you need some industry.

There are more subtle examples too: to hire expert foreigners to manage your electricity industry and get things moving, you need civil servants who know how to hire foreigners. But you probably don't have any civil servants expert in hiring foreigners - you really need to hire foreigners to acquire some.

The general point is that Liberia starts from the disadvantage of having multiple disadvantages simultaneously. If we had any one of the country's problems, we would fix it pretty quickly - if we had no electricity, we would be able to build some up pretty darn fast. If we had no schools, we would rapidly create some.

If the civil service was weak, we would establish one by hiring good people from the private sector. But if we lacked electricity, schools and civil servants, the challenge of building each of these sectors together would be more than the sum of the challenge of building each individually. Progress will not occur on one front without progress on the others, and achieving progress on all fronts is going to be slow.

A female market trader with her goods One of Liberia's many market traders

An important implication of this is that we should not judge Liberia by western standards. When you ask a question about why something has not happened, it is generally because you can't assume that kind of thing happens in that environment.

Western donors who attach tough terms and conditions to their aid and who want endless compliance forms to be filled out, appear not to get it at all. There simply are not enough people to fill those forms out and so aid often takes too long to get through. A point made by President Ellen Johnson Sirleaf to me, in an interview.

As a final Catch-22 example, I would cite the Liberian tax system. Tax revenues provide money to support health and education but health and education are necessary for a well-functioning tax system.

I spent an afternoon with a tax inspector in Bong County and was dismayed to find his office was a small empty dilapidated building, furnished with a table, a couple of chairs and a cupboard. It had only just acquired a lock on the door. The inspector's taxpayers typically didn't keep accounts; he didn't have transport to get around to see them… and so on and so on. Where do you start in building a tax system out of that?

Oh, and if that wasn't bad enough, the population of prime age adults - the ones who all societies rely on to do most of the important tasks - spent their formative years in war, being taught how to destroy things rather than how to create them. The human capital was wiped out by the years of self-destruction along with the infrastructure.

In short, why does development take so long, even in a place where the intentions of those in power are good? The answer is because while any one physical or human institution can be reformed or improved rapidly, it simply takes a long time to create them all from scratch.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories


BBC Business Live

    TESCO 07:57: BBC Breakfast

    Steve Dresser from Grocery Insight tells Breakfast the biggest concern for Tesco investors is the possibility of more skeletons in the closet. "The real fear for the City is if they go further back in the accounts and realise this was an ongoing practice," he says.

    TESCO 07:52:

    What will the market reaction be to Alan Stewart's early start as Tesco's finance director? Shares fell nearly 12% yesterday, wiping off more than £2bn from the value of the company. We'll find out what happens in about ten minutes when the market opens.

    OIL PRICES 07:43: BBC Radio 4
    Oil pump jacks pump oil at Al-Jbessa oil field in Al-Shaddadeh town of Al-Hasaka governorate,

    Nick Butler, a former adviser to BP and a visiting professor at Kings College London, says the price of oil - already 15% lower this year - could fall to as low as $80 a barrel. He says Saudi Arabia could end up as one of the big losers. Saudi Arabia "will be squeezed" by other oil producing nations, he says. "They will be putting pressure on them to reduce production. Saudi Arabia could be forced to cut production to stabilise the price at perhaps $80, perhaps $85 a barrel."

    TESCO Via Twitter Simon Jack Business correspondent, BBC News

    tweets: After uncomfortable moments yesterday when Dave lewis was asked he had a CFO or not, Alan Stewart starts today. M&S release him 2mth early.

    TESCO 07:32: Kamal Ahmed BBC Business editor

    I am told that Alan Stewart's arrival came after a direct appeal from Dave Lewis to Marc Bolland who "graciously" allowed him to leave early.

    MOTHERCARE 07:25:

    Mothercare has announced plans to raise about £100m from investors. The company's chairman, Alan Parker, says the rights issue is a "pivotal step" and hopes it will return Mothercare's UK business to profitability.

    TESCO 07:23: Kamal Ahmed BBC Business editor

    The announcement that Alan Stewart is starting as Tesco's finance director today will bring some relief to investors. A business facing an accounting crisis with no chief financial officer was not exactly comfortable. Sir Richard Broadbent, the chairman, will hope that the move will quieten those who believe that he should consider his position.

    TESCO 07:17: BBC Breakfast

    Tesco's share price fell nearly 12% yesterday - that's £2.2bn off the value of the company. Kevin Doran from Brown Shipley tells Breakfast's Steph McGovern: "It's a significant fall because it's a permanent fall... this is a car crash happening in slow motion". He also says he would be "astonished" if this was the end of the bad news.

    A Jimmy Choo shoe

    Luxury shoes brand Jimmy Choo has confirmed its intention to float on the London Stock Exchange this morning. In a statement, chief executive Pierre Denis says the firm has "strong momentum" adding he is confident its future as a public company can only extend its reputation.

    TESCO 07:13:

    Here's a link to that (very short) statement from Tesco on Alan Stewart's arrival. The supermarket faced criticism after yesterday's revelations that it would be effectively running without a CFO for the rest of the year, had Mr Stewart started in December as originally planned. Will investors react positively to this announcement at the start of trading?

    TESCO 07:05: Breaking News

    Tesco has said this morning that its new chief financial officer Alan Stewart will join the company today. That's almost three months early.

    SUGAR Via Twitter Adam Parsons Business Correspondent

    tweets: "Tate and Lyle: Disruption to supply chain in first half of the year has cost business £40m"

    Rico Hizon

    Some apparently good economic news from China, according to World Business Report. Activity in manufacturing unexpectedly picked up in September according to the latest figures, even as factory employment slumped. Rico Hizon in Singapore tells the programme that it is a big relief for investors after a string of negative news out of China in recent weeks.

    TESCO 06:59: BBC Radio 4

    Ms Palmer of Begbies Traynor tells Today when Laurie McIlwee resigned in April "it was allegedly due to some certain differences of opinion" between former chief executive Philip Clarke and Laurie McIlwee. "So it could well be that this issue goes that far back."

    Oil well

    The Rockefellers - the US industrial family that made a fortune out of oil in the late 19th century, is going to sell its investments in fossil fuels and reinvent itself in clean energy, according to US press reports. Rockefeller Brothers Fund, founded by the family heirs, has signed a pledge to get rid of fossil fuel assets.

    TESCO 06:42: BBC Radio 4

    More from retail analyst Julie Palmer on Tesco. She says there has been "some concern over a period of time that the Tesco board just hasn't been strong enough". Tesco relies a lot on non-executive directors, she adds. It's also not clear how long former chief financial officer Laurie McIlwee has been absent from the company following his resignation in April.

    TESCO 06:38: BBC Radio 4

    It looks like Tesco has "recognised the acceleration of payments from suppliers for in-store promotions and bonus payments, while deferring costs relating to food that is out of date and stock theft", Julie Palmer of Begbies Traynor tells Today (whatever this means). But she says it's not clear if they have broken accounting rules.

    LISTEN AGAIN Via Twitter Adam Parsons Business Correspondent
    LABOUR CONFERENCE 06:24: Radio 5 live

    British Chambers of Commerce boss John Longworth says Ed Balls' speech at the Labour party conference yesterday marked a "paradigm shift" in Labour's approach to business. He tells Wake Up to Money a slew of policy plans including cuts to business rates, infrastructure plans and a decision on Heathrow expansion are all good news. Suggestions that Labour is anti-business, he says, are "behind the curve".

    RATES RISE? 06:18: Radio 5 live

    The Bank of England should raise interest rates straight away according to Jim O'Neill, the economist and former chairman of Goldman Sachs Asset Management. He tells Wake Up to Money: "there's no reason not to move right now", and more "conventional" rates will be appropriate for the recovering economy.

    BARCLAYS FINE 06:10:
    A Barclays sign hangs outside a branch of the bank in the City of London

    Ahead of its trading statement later this morning Barclays Bank appears to have found itself in some regulatory hot water again. the Financial Times reports the bank will later today be fined £38m for failing to keep client's money separate from its own at its investment arm. The fine, levied by the Financial Conduct Authority, would be a record for this type of misconduct.

    TESCO IN SOUTH KOREA 06:03: Radio 5 live

    Tesco's troubles follow it to South Korea, the BBC's Steven Evans in Seoul tells Wake Up to Money. Regulators there have opened an investigation into Homeplus - a local Tesco subsidiary with 400 stores. Allegations include the selling of customer data, and the suggestion that a BMW car, meant as a customer lottery prize ended up in the hands of a friend of the staff - so not related to Tesco's current UK problems.

    06:00: Edwin Lane Business reporter, BBC News

    There's also more on the Labour party conference, which continues today. Get in touch with us throughout the morning on bizlivepage@bbc.co.uk or on Twitter @BBCBusiness.

    06:00: Matthew West Business Reporter

    Morning folks. This morning we have a trading update from Barclays bank as well as one from Punch Taverns. We also learned of 1,700 job losses at Phones 4U overnight. There are the latest set of public sector finances to examine later on. And there's bound to be more on Tesco's accounting irregularities. Stay with us.



  • Peaky Blinders publicity shotBrum do

    Why is the Birmingham accent so difficult to mimic?

  • Oliver CromwellA brief history

    The 900 year story behind the creation of a UK parliament

  • Image of Ankor Wat using lidarJungle Atlantis

    How lasers have revealed an ancient city beneath the forest

  • TheatreBard taste? Watch

    Are trailer videos on social media spoiling theatre?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.