Analysis - Mining, agriculture may brighten Liberia's future

MONROVIA Fri Nov 18, 2011 12:26pm GMT

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MONROVIA (Reuters) - Big mining and agriculture projects will fuel a rapid economic expansion in Liberia in the coming years, but the country faces challenges ensuring the boom will help ordinary Liberians.

The stakes are high for the West African state, which has attracted billions of dollars in resource investment since the end of a 1989-2003 civil war, but whose infrastructure remains in ruins and most of its 4 million people in poverty.

"In a way, it is an issue of national security," said Yuri Sobolev, the IMF's country representative in Liberia. "It is urban, underemployed youth. You need to give them some jobs, some stake in the future."

Newly re-elected President Ellen Johnson-Sirleaf has promised to cut the poverty rate, build infrastructure and boost employment during her second term, and silence critics who say she failed to do that in her first mandate.

She also predicted years of double-digit economic growth on the back of resource development, a prediction analysts say is feasible if the country's many iron ore, palm oil and forestry projects start on schedule.

"The general prosperity of Liberians will be sharply enhanced," she told Reuters last week following the November 8 poll, marred by deadly clashes between opposition supporters and security forces, and a boycott by Johnson-Sirleaf's main rival.

But success will mean beating the "resource curse" that has afflicted many other African states, bringing insecurity and rampant levels of official corruption to oil producers like Nigeria and Angola and top bauxite supplier Guinea.

ArcelorMittal, the world's top steel maker, recently made Liberia's first iron ore shipment since the end of fighting and has plans for a big expansion in its operations. BHP Billiton, Affero, and China Union are also developing mining projects, while Firestone and Sime Darby are ploughing money into agribusiness.

The IMF's Sobolev said he expects Liberia's GDP growth to hit between 7 and 10 percent during 2011 and 2012 thanks to the resource projects. The government is now in a race to finalise new revenue management laws that will guide how the earnings from those resources are spent.

"Mining is very capital intensive. There may be some downstream supply chain activities that could provide jobs and other opportunities for Liberian businesses, but ultimately it is the revenue generated by those concessions that will allow the government to undertake major infrastructure projects," said Sobolev.

"If you don't have roads or electricity, it is hard to get a business going. That's why the issue of managing natural resource revenues is important," he said.

NOT JOB READY

There is one place in Liberia where everyone has a job, healthcare and education are free, and sacks of rice are sold at 20 percent of the market price. Welcome to the 119,000-acre (48,000 hectare) Firestone rubber plantation.

"We are in Liberia. But we are mostly self-sufficient," Firestone spokesman Rufus Karmorh said in Harbel, a town within Firestone's concession about an hour's drive outside Monrovia.

Firestone with its 7,000 employees is replanting 3,500 acres of rubber trees in Liberia in an effort to push production back up to pre-war levels.

Current output from the plantation is about 30,000 gallons (114,000 litres) of natural rubber per day, about 25 percent below pre-war levels, according to production manager Steve Snoh.

But he added that official output was crimped by rampant theft by residents of neighbouring villages, where the harsh realities of Liberia's real economy are more evident.

ArcelorMittal, meanwhile, expects to produce more than one million tonnes of iron ore from its Yekepa mine in Nimba County this year before boosting output to 4 million tonnes per year from 2012 and 10-15 million tonnes per year by 2014 or 2015.

"Some 92 percent of the total employee strength is Liberian," ArcelorMittal Liberia CEO Rajesh Goel told Reuters earlier this month.

"All of the unskilled labour is Liberian, and we have trained almost 200 others in operation of mining equipment and plants," he said. "I think we will have a very positive impact on the economy, providing employment as well as revenues to the government."

But the challenge of readying Liberians for skilled jobs in these and other emerging industries is huge, according to Johnson-Sirleaf, and vital to ensuring the country retains some of the wealth from its exploited resources.

"Many of those young men, many are ex-combatants, many have been child soldiers, many have been bypassed on their education and their skills," she said. "That's what we have to address. Give them training, give them skills, get them jobs, get them involved in positive endeavours."

An official with Manitoba Hydro, which is working with Liberia's government on construction of a hydro power plant, said finding skilled workers was tough, and that some applicants even had trouble identifying colours like red, blue and yellow -- common in wiring -- by their correct names.

"Just look at where the country started in terms of institutions, either non-existent or destroyed, including the loss of human capital," said Sobolev.

"The challenge for the administration is to manage expectations. It is not easy to address, but you can not get the house without the foundation."

(Writing by Richard Valdmanis; Editing by Richard Balmforth)

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