Housing Finance in Liberia
Overview
This profile is also available in French here.
To download a pdf version of a full 2019 Liberia country profile, click here.
Liberia’s projected growth in the real gross domestic product (GDP) was mainly attributed to developments in the mining and panning industries. Affordability is a major challenge for Liberia’s housing sector. About 2.2 million Liberians or 50.9 percent of the population is classified as poor with poverty considered higher in rural areas (71.6 percent) than in urban areas (31.5 percent).
In 2018, the country’s financial sector was strong and resilient. This is because there was a growth in loans, total deposits, total capital, mobile money agents and a stable liquidity ratio. On the other hand, the Liberian insurance industry’s profitability was challenged due to increased operating expenses and a small insurable market. The Liberian Bank for Development and Investment (LBD) is the only bank that provides mortgages in Liberia and there are nine formal real estate agents. The National Housing Authority (NHA), established through an Act of parliament, is the government agency with the mandate to initiate, plan and execute housing programmes in the country. However, Liberia’s high rates of poverty and informally employed people suggest that the vast majority of the citizens cannot afford houses constructed by the NHA. Further, there are no housing microfinance institutions in Liberia. Options are also being explored for housing cooperatives.
Documenting housing-related data in Liberia is challenging because there is no housing ministry in the country. The absence of a ministry has not deterred the government from investing in housing delivery in the country. In 2018, the government adopted a pro-poor approach to housing by prioritizing the development of welfare housing. Moreover, Liberia’s housing sector presents huge opportunities for investment. In particular, the flexibility of the rental housing sector presents an opportunity for investment because the sector follows a simple system and requires fewer qualification requirements.
Find out more information on the housing finance sector of Liberia, including key stakeholders, important policies and housing affordability:
- Macroeconomic Overview
- Access to Finance
- Affordability
- Housing Supply
- Property Markets
- Policy and Regulation
- Opportunities
- Availability of data on housing finance
- Additional sources
- Websites
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2018 edition, which has up-to-date profiles for 54 African countries.
Download yearbookLiberia
Macroeconomic Overview
The Republic of Liberia is on the west coast of Africa, bordering Ivory Coast, Sierra Leone, Guinea and the Atlantic Ocean on the East, West, North and South respectively. The country’s Pro-Poor Agenda for Prosperity and Development (PAPD) 2018-2023 is the second in a series of five-year National Development Plans anticipated under the Liberia Vision 2030 framework. It follows the Agenda for Transformation 2012-2017 and was informed by lessons learned from the implementation of the Interim Poverty Reduction Strategy 2007 and the Poverty Reduction Strategy (2008-2011). The PAPD is projected to cost L$1.18 trillion (US$6 billion) up to 2030 and will be funded from both domestic and external resources.[1]
Liberia’s urban population is estimated to be 53.9 percent with a mean household size of 4.2 people and the rural population is estimated at 46.1 percent with a mean household size of 4.3 people.[2] PAPD projects that, by 2030, the Human Development Index will rise from 0.427 to 0.523 (or by 0.096 points), as the multi-dimensional poverty index also improves by 0.115 points, from 0.374 to 0.259 nationally.[3] Liberia is ranked 174 out of 190 countries in ease of doing business compared to the 172 recorded in 2017. Liberia’s economy expanded by an estimated three percent in 2018 to L$182.98 billion (US$932.5 million) from L$177.45 billion (US$904.3 million) in 2017 following a downward adjustment of 0.2 percentage points in September 2018. The projected growth in real gross domestic product (GDP) was mainly attributed to developments in the mining and panning sector through industrial gold production, and growth in the agriculture and fisheries sector. Production of iron ore, rubber, diamonds, cocoa, crude palm oil and cement increased over this period, while beverages and sawn timber production decreased.[4] The GDP was L$637.74 billion (US$3.25 billion) in 2018,[5] with a 28.5 percent inflation rate recorded at the end of December 2018.
The country’s total revenue outturn for 2017/18 was L$97.33 billion (US$469 million); a decline of L$10.79 billion (US$55 million) compared to L$102.82 billion (US$524 million) recorded in the financial year (FY) 2016/17. The country’s domestic revenue for FY2017/18 declined by L$6.83 billion (US$34.8 million) to L$83.8 billion (US$427 million), compared to L$90.62 billion (US$461.8 million) recorded in FY2016/17. Revenue performance against target for FY2017/18 was 87 percent declining by one percent, compared to 88 percent for FY2016/17. Liberia’s annual domestic revenue growth for FY2017/18 was recorded at negative seven compared to two percent recorded in FY2016/17.[6]
As at the end of November 2018, average rates for lending personal loans and mortgages were recorded at 12.4, 13.3 and 12.3 percent respectively compared to 13.3, 12.9 and 13.4 percent recorded in 2017.[7] The exchange rate for one US$ increased from L$147.01 to L$196.23. The Central Bank of Liberia (CBL) is the regulator of the country’s financial sector. The monetary policy thrust of the CBL is anchored on achieving price stability through broad exchange rate stability. During the year, the foreign exchange auction, sales of government securities (i.e. Treasury bonds) and reserve requirement ratios were the policy instruments used to influence domestic monetary conditions. Government securities were used for both liquidity management and short-term cash flow smoothing to help scale down rapid accumulation of excess liquidity in the economy meeting public expenditure demands.[8]
The National Housing Authority (NHA), established through an Act of parliament, is the government agency with the mandate to initiate, plan and execute housing programmes in the country. Out of the 108 housing units under construction in 2018, only 36 are completed to date by the NHA.[9] A Memorandum of Understanding was signed between the NHA and Shelter Afrique in 2019 for 1 000 housing units to be constructed by the NHA with funding from Shelter Afrique.[10] Liberian Bank for Development and Investment (LBDI) is the only bank that provides mortgages in Liberia and there are nine formal real estate agents.
Public debt stock as at the end of November 2018 stood at US$987.8 million, reflecting an increase of 13 percent relative to the stock at the end of December 2017. Total public debt amounted to 30.7 percent of GDP, up from 26.6 percent of GDP as at December 2017 due to external debt which rose by 18.8 percent year-on-year. Total external debt stock as at November 2018 rose by 18.8 percent to US$722.6 million (22.5 percent of GDP) compared to the stock reported at end 2017. The rise in the external debt position was driven by increases in borrowing from both multilateral and bilateral creditors. Multilateral debt surged by 15.2 percent when matched with the stock reported at end December 2017. The World Bank and African Development Bank were the two leading multilateral creditors to Liberia in 2018, accounting for 75.6 percent of total multilateral debt, while Kuwait’s debt to Liberia constituted 53.1 percent of total bilateral debt during the period. External debt made up the bulk of total public debt in 2018, accounting for 73.2 percent. Total domestic debt stock stood at L$52.04 billion (US$265.2 million) or 8.2 percent of GDP, slightly reduced by 0.3 percent, from L$52.23billion (US$266.1 million) or 8.1 percent of GDP in 2017. The moderate fall in domestic debt stock during 2018 was as a result of reduction in payments of government’s obligations to financial institutions, mainly the CBL. When the stock of domestic debt is measured against the amount reported in 2016, total domestic debt declined by 1.2 percent.[11]
[1] Ministry of Finance and Development Planning. Pro poor Agenda for Prosperity and Development. Pg. 26.
[2] Liberia Institute of Statistics and Geo- Information Services. Household Income and Expenditure Survey 2016. Statistical Abstract. Pg. 8.
[3] Ministry of Finance and Development Planning. Pro Poor Agenda for Prosperity and Development. Pg. 3.
[4] Central Bank of Liberia. Annual Report 2018. Pg. 12.
[5] Trading Economics. Liberia GDP https://tradingeconomics.com/liberia/gdp (Accessed 15 August 2019).
[6] Liberia Revenue Authority. Annual Report 2017/2018. Pg. 9.
[7] Central Bank of Liberia. Annual Report 2018. Pg. 2.
[8] Central Bank of Liberia. Annual Report 2018. Pgs. 19-20.
[9] J. Motalee Davis (2019). Interview, NHA Project Engineer.
[10] Press Release: National Housing Authority. Shelter Afrique Sign MOU for the provision of 1,000 Housing Units for Low Income Earners in Liberia. Front Page Africa. 17 July 2019. https://frontpageafricaonline.com/news/national-housing-authority-shelter-afrique-sign-mou-for-the-provision-of-1000-housing-units-for-low-income-earners-in-liberia/ (Accessed 14 August 2019).
[11] Central Bank of Liberia. Annual Report 2018. Pg. 58.
Access to Finance
Liberia financial sector consists of nine banking institutions, 18 registered microfinance institutions, three credit reference bureaus, 19 insurance companies, two licensed insurance brokerage firms, 152 registered/licensed foreign exchange bureau, 12 licensed Rural Community Finance Institutions, 285 credit unions and 2 300 village savings schemes. Orange Money, a subsidiary of Orange Communication Company, and Lonestar Cell MTN Mobile Money Incorporated are the two mobile money providers operating in the country. The number of mobile money agents in the country increased from 3 525 in 2017 to 6 203 as at 31 October 2018. The banking industry, which accounts for about 85 percent of the total assets of the financial sector, witnessed strong growth in balance sheet size in 2018. Total assets of L$142.1 billion (US$724.1 million) rose by 44.6 percent compared with 26 percent in 2017; total capital increased by 46.9 percent compared with 21.7 percent in 2017; and total deposits grew by 38 percent compared with 20.9 percent in 2017. Growth in loans was 39.5 percent compared with 31.4 percent in 2017 and liquidity in the sector remained strong during the year with a liquidity ratio of 40.7 percent which is 25.7 percentage points above the 15.0 percent minimum requirement. It is important to note that these increases are partly attributed to the conversion effect of the United States dollar to the Liberian dollar, which is the reporting currency. The insurance industry witnessed steady growth in total assets, largely attributed to a fresh injection of capital through real properties and cash. However, the industry’s profitability remained challenged, partly due to high operating expenses and the small insurable market with 19 insurance companies. Overall, the financial system remains strong and resilient.[1]
The average interest rates in the economy for the 11-month period ended November 2018 showed mixed trends with increases recorded for interest rates on both personal loans and certificate of deposits but decreases for the lending rate, mortgage rate, time deposits rate and saving deposits rate. The average rates on lending, mortgages, time deposits and saving deposits decreased to 12.4 percent, 12.3 percent, 3.5 percent and 2.1 percent, respectively, from 13.3 percent, 13.4 percent, 3.6 percent and 2.2 percent, reported at end-December 2017. However, the average rates on personal loans and certificate of deposits increased to 13.3 percent and 3.3 percent, respectively, from 12.9 percent and 3.2 percent. The gradual increase in the savings rate coupled with the reduction in lending rates points to the efforts by some banks to mobilise domestic savings and encourage private sector investment.[2]
Commercial mortgage values also increased from L$3 188.52 (US$16.20) to L$382 706.15 (US$1 950.29) during the same period.[3] The mortgage term is 10 years and the down payment is 30 percent. The total number of mortgage outstanding is 65 while the number of non- performing mortgage is 30. Value of residential mortgage outstanding is L$492 147 784.00 (US$2 508 015.00) while the value of non-performing mortgage is L$2 153 385 583.00 (US$1 097 378.50).
[1] Central Bank of Liberia. Annual Report 2018. Pg. 42.
[2] Central Bank of Liberia. Annual Report 2018. Pg. 24.
[3] Central Bank of Liberia. Financial Statistics, Vol 21 No. 1 Jan-Feb 2019. Pgs. 15-17.
Affordability
Affordability is a major challenge for Liberia’s housing sector. About 2.2 million Liberians or 50.9 percent of the population is classified as poor with poverty considered higher in rural areas (71.6 percent) than in urban areas (31.5 percent). The unemployment rate in Liberia is estimated at 3.9 percent nationally. The percent of Liberians in informal employment is as high as 79.9 percent and the vulnerable employment rate is 79.5 percent, which highlights the fragility and instability in the labour market. Many Liberians (22.4 percent) earn between L$6 000 (US$30.58) and L$15 000 (US$76.44) monthly, while only 13.5 percent earn over L$30 000 (US$152.88). [1]
Liberia’s high rates of poverty and informally employed people suggest that the vast majority of the citizens cannot afford houses constructed by the NHA as well as the mortgage programme being offered by LBDI with Government of Liberia stimulus funding. Houses constructed by the NHA and mortgaged by LBDI at the cost of L$2 943 450.00 (US$15 000.00) have a required loan-to-value of 70 percent. With a down payment of 30 percent, and a loan of L$1 962 300.00 (US$10 500.00) and an interest rate of eight percent over 10 years, the required monthly payment is L$24 921.21 (US$127.00) and the minimum income required is L$72 212.64 (US$368.00). To enhance affordability, especially for informal workers living in slums, Habitat for Humanity International signed a Memorandum of Understanding with Foundation for Women to pilot a housing microfinance product within Monrovia in collaboration with the slum upgrading unit of the NHA. Currently, there is no housing microfinance institution in Liberia. Options are also being explored for housing cooperatives.
[1] Liberia Institute of Statistics and Geo- Information Services. Household Income and Expenditure Survey 2016, Statistical Abstract. Pg. 59.
Housing Supply
In Liberia, owner-occupied housing accounts for 44.6 percent, employer-subsidised housing 1.4 percent, employer-provided housing (rent free) 2.1 percent, rented housing 27.3 percent and rent-free housing 24.5 percent. In urban areas, owner-occupied housing accounts for 29.3 percent, employer-subsidised housing two percent, employer-provided housing (rent free) 1.4 percent, rented housing 46.3 percent and rent-free housing 21.0 percent. In rural areas, owner-occupied housing accounts for 61.1 percent, employer-subsidised housing 0.8 percent, employer-provided housing (rent free) 3.0 percent, rented housing 6.9 percent and rent-free housing 28.3 percent.
Liberia’s current housing stock is yet to be updated because the 2018 National Population and Housing Census was not conducted. Plans are under way to conduct the census in 2020. The country does not have a housing ministry, resulting in lack of updated housing statistics in between census periods.
However, Liberia’s stock of dwellings was estimated at 327 000 in 2010 with 44 percent of that stock (144 000) needing renovation or reconstruction. The stock in good order was 183 098 dwellings. The need to renovate/reconstruct all the 144 000 by 2030 will be equally spread between 2010-2020 and 2021-2030. The need for new housing by 2030 is 694 000 dwellings in urban Liberia, 512 000 more than the 2010 stock, with delivery of the 512 000 dwellings over 17 years (2013 to 2030).[1]
The government’s emphasis in 2018 was on free/welfare housing. Construction work has commenced on the much needed Pro-poor Housing units project in Grand Kru County. For a pilot phase, eight communities making up Sass Town are benefitting from the 282 modern houses currently being constructed.[2] In addition, 50 housing units have been handed over in Popo Beach, New Kru Town.[3] The NHA has completed 36 out of the 108 housing units being constructed in VOA Community, Brewerville City for the voluntary relocation of sea erosion victims from West Point Township.
[1] UN-Habitat. Liberia Housing Sector Profile 2014. Pg. 49.
[2] Housing News.org. Liberia Pro Poor Housing Begins. 8 March 2019. https://housingnews.org.ng/2019/03/08/liberia-pro-poor-housing-units-begin/ (Accessed 18 July 2019).
[3] Executive Mansion. President Weah Dedicates 50 Modern Housing Units in Popo Beach as He Reiterates Vows to Serve All Liberians. 11 August 2019 https://www.emansion.gov.lr/2press.php?news_id=4974&related=7&pg=sp (Accessed 19 August 2019).
Property Markets
Liberia is ranked 182 with a score of 31.09 in registering a property. There are 10 procedures, and it takes 44 days at a cost of 13.8 percent of the property value, and quality of land administration of 3.5 percent.[1] Liberia does not have a formal land market. Liberia Land Authority (LLA) is in its infant stage and is yet to gather information on the total number of residential properties with title deeds. The LLA is putting into place systems to ensure that the land sector is fully regulated.[2] The National Archive where land deeds are registered is not digitised. Liberia’s Land Rights Act describes the nature of land ownership in four categories: the right to possess, the right to use, the right to exclude, and the right to transfer by sale, devise, gift or otherwise. A person not having title to land may still have and enjoy the right to possess and/or use the land pursuant to (i) an agreement or lease; (ii) an easement; or (iii) a licence.
The government may also grant a concession on government land and public land. The four categories of land ownership in Liberia are public land, government land, customary land and private land. All interests and rights in land, irrespective of the identity of ownership or the nature of ownership, constitute property entitled to the protection provided by the Constitution of Liberia for all property rights.
Current data on the number of private housing firms, their production and sales levels are not readily and centrally available. Rental housing supply and demand are not regulated. Information on housing demand and supply and changes in housing backlog is not available. No national data is available on residential resale market, changes in price of houses, costs of rental properties and land respectively. In addition to the NHA’s nine formal estate agents, there are also informal estate agents.
A total of 70.26 percent of houses in Liberia are owned (55.31 percent urban and 84.50 percent rural) while 21.21 percent are rental houses (32.86 percent urban and 10.12 percent rural) and 8.53 percent are either squatters or catagorised as other (11.83 percent urban and 8.53 percent rural) respectively.[3]
[1] World Bank Group. Doing Business 2019, Economy Profile Liberia. Pg. 21.
[2] Urias Garsinii. Interviewed by Es-Samir Bropleh, 2019 Liberia Land Authority.
[3] UN-Habitat. Liberia Housing Sector Profile 2014. Pg. 38.
Policy and Regulation
The Land Rights Act was signed into Law in 2019.[1] Though the Act does not address housing and housing finance directly, it broadens access to land and guarantees protection under the laws of the Republic. This has the propensity to attract interest in land acquisition for housing investment. Habitat for Humanity International in collaboration with the Slum Upgrading Unit of the NHA has concluded consultations on the draft Voluntary Gender Responsive Relocation Guidelines. Additional consultations are under way to formulate the National Urban Policy.
These policy interventions are besides the previous policy interventions reported in 2018, including the Act Against Criminal Conveyance of Land (26 August 2014); Framework for National Land Use Planning 2018 under way by the Liberia Land Authority with inputs from stakeholders; the Act establishing the National Housing Authority (1960); the Masterplan Study on Urban Facilities Restoration and Improvement in Monrovia in the Republic of Liberia, November 2009; the Urban Policy discussion paper; and the establishment of the NHA-Slum Upgrading Unit with support from Habitat for Humanity and Cities Alliance to develop and guide interventions in slum upgrading and affordable housing. The unit is a shift in government policy from addressing the housing needs of formally employed households with verifiable income to low income segments via an incremental housing approach. Voluntary Relocation Guidelines and Slum Upgrading Guidelines that will eventually lead to a Relocation Policy and a Slum Upgrading Policy are being developed at present. Profiling slum communities and gathering information to enhance policy interventions is being conducted by the Young Men’s Christian Association with support from Slum Dwellers International. To date, 116 slum communities within Monrovia have been profiled compared to 63 reported in 2018.
[1] UNDP Liberia. 20 September 2018. http://www.lr.undp.org/content/liberia/en/home/presscenter/articles/2018/president-weah-signs-local-government—liberia-land-rights-acts.html (Accessed 8 September 2019).
Opportunities
There are opportunities for investment in housing construction projects, mortgages, housing microfinance and housing cooperatives to support both large-scale housing construction for middle to high income levels as well as housing solutions for low income households and slum dwellers through initiatives such as incremental housing. With the enactment of the Land Rights Act and the Act against Criminal Conveyance of Land, there is a huge opportunity to formalise the land market and attract more investment. There are opportunities to invest in alternative construction materials to reduce the costs of housing construction, considering that most of the country’s building materials are imported.
The Credit Reference System (CRS) managed by CBL continues to provide credit information on borrowers’ creditworthiness to banks and non-bank financial institutions. The system has been assisting financial institutions in their credit appraisals for potential borrowers, focused mainly on positive and negative credit reports. A total of 23 039 credit inquiry requests were received from the financial institutions in 2018.[1] The CRS presents an opportunity for investment in housing finance. According to the National Housing Profile of Liberia, the country’s housing need is estimated at 512,000 housing units by 2030 and this is an opportunity to attract investment into the sector. A large diaspora population is interested in returning home now that the 14 years of civil conflict is over. There is a compulsory direct deposit regime in place for public sector workers’ salaries and benefits payment that investors can take advantage of.
[1] Central Bank of Liberia. Annual Report 2018. Pg. 53.
Availability of data on housing finance
The CBL collects and publishes data on mortgage amounts, average interest rates and construction finance in its annual reports and financial statistics. This information can be accessed on its website http://www.cbl.org.lr/.
Data on the number of mortgages, number of outstanding mortgages and amount, number of non-performing mortgages and amount, required down payment and tenure is not published but can be provided on request. Data is not readily available on other key indicators for the sector, including investment into housing finance, profitability of the mortgage sector, mortgage repayment performance, sectors of the population that benefit, overall demand for mortgages and construction finance versus total loans provided. Accessing such unpublished data from CBL is challenging.
The Liberia Institute for Statistics and Geo-Information Services (LISGIS) was created in July 2005 to establish, develop and maintain a holistic National Statistical and Spatial Data System and an integrated National Statistical and Spatial Database. The 2014 Household Income and Expenditure Survey is the last account of household statistics. The most recent population census was undertaken in 2008. Obtaining updated statistics is therefore difficult.
Additional sources
Ministry of Foreign Affairs, Republic of Liberia. An Act Against Criminal Conveyance of Land, 26 August 2014.
Ministry of Foreign Affairs, Republic of Liberia. An Act to Amend Title 12, Executive Laws of the Liberian Codes of Laws Revised and to Add Thereto a New Chapter Creating the Liberia Land Authority. 5 October 2016.
Ministry of Foreign Affairs, Republic of Liberia. Act to Establish the National Housing Authority 1960.
Japan International Cooperation Agency YACHIYO Engineering Co. Ltd. Katahira & Engineers International. The Masterplan Study on Urban Facilities Restoration and Improvement in Monrovia in the Republic of Liberia. November 2009.
Ministry of Foreign Affairs, Republic of Liberia. The Zoning Act of 1957.
Websites
Central Bank of Liberia. http://cbl.org.lr/
Liberia Revenue Authority. https://lra.gov.lr/
Liberia Institute of Statistics and Geo-Information Services. https://www.lisgis.net/
World Bank Group. https://www.worldbank.org/
Trading Economics. https://tradingeconomics.com/liberia/gdp
Housing News.org https://housingnews.org.ng/2019/03/08/liberia-pro-poor-housing-units-begin/
UNDP Liberia. http://www.lr.undp.org/
