BOX 3.12
THE GOVERNMENT OF LIBERIA, THE WORLD BANK, AND IFC WORKING TOGETHER IN THE COUNTRY TRANSITION TO RECOVERY
After nearly two decades of conflict, Liberia’s economy, institutions, and human capacity had been devastated when the civil war ended in 2003. Following the election of a democratic government, Liberia is moving from the transitional post-conflict recovery phase to laying the foundations for long-term development. The government focus is on catalyzing economic growth by getting major transport corridors functioning to open up trade and commerce, revitalizing agriculture, getting energy infrastructure up and running, and generating employment. Liberia’s government goal over the next three years is to firmly establish a stable and secure environment and to be on an “irreversible” path toward rapid, inclusive, and sustainable growth and development. Within the context of this improved business environment, the engagement of the private sector is critical to financing Liberia’s recovery. In a rare example of collaboration across the World Bank Group, support is being provided to develop Liberia’s tree crop sector. IFC is providing technical assistance through sector studies and following up with investments. Foreign Investment Advisory Services (FIAS) and Private Enterprise Partnership for Africa (PEP Africa, funded by IFC and other donors) are providing input to the development of a model concession contract in the form of policy papers analyzing the issues that typically form part of a concession agreement. The World Bank, meanwhile, is supporting the policy capacity of the Ministry of Agriculture (the authority for agricultural concessions) under the Agriculture and Infrastructure Development Project and is leading the policy dialogue and the integration of these issues into the poverty reduction strategy. The joint PEP Africa–FIAS projects include: • Private Sector Development Growth in Post-Conflict Program: Phase 2 ($4.6 million) Drawing on a 2006 mini-diagnostic, in consultation with the Ministries of Commerce and Finance, and the National Investment Commission, the program focuses on business registry, investment promotion, models for tree crop concession and outgrower engagement (in collaboration with the World Bank), and the business regulatory framework. • Liberia Trade Logistics Project ($0.85 million) This project seeks to reduce time and cost for import and export transactions and to achieve efficiencies in trade logistics through targeted reforms. • Private Sector Development Growth Support through Special Economic Zones (active, $0.7 million) The project seeks to assist the government in the creation of special economic zones where companies invest, create jobs, and produce goods within an improved business environment. IFC has also contributed with an investment in a rubber producer ($10 million), demonstrating that it is possible for the private sector to invest in agribusiness in this post-conflict country. A World Bank economist based in Accra participated in the due diligence for this investment. The client is competing for exports with producers from West Africa and Southeast Asia, the latter being by far the world’s largest producing region. Therefore, the client helped by IFC sustains a higher level of operational efficiency and improved plantation yields through new plantings and improved varieties. Additionally, the client has upgraded its outgrower program, including the provision of planting materials and fertilizers to outgrowers, delivering extension services, and extending financial advances. Sources: IEG review of the portfolio, Poverty Reduction and Economic Management, and the draft 2010 CAS.
IFC can play a larger role in linking farmers and agribusiness SMEs, not only with its trader-processor clients but also with its food-retailer clients. The important role of retailers is recognized in a recent ECG paper (ECG 2010). IFC is exploring a business model in Eastern Europe that seeks to achieve integration of farming and food retailing.27 The three types of clients (traders, processors, and retailers) can help each other by reducing barriers and costs to exchange and encouraging greater market integration between rural and urban areas. However, the outgrower farmer model is prone
to contract ruptures and disputes between farmers and trader-processors in the absence of efficient dispute resolution mechanisms (Leles and Zylbersztajn 2007). IFC can help mitigate these by acting as a neutral broker.28
IFC can play a larger role in linking farmers and agribusiness SMEs with trader-processor and food-retailer clients.
World Bank Group Activities and Results
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