Documentof The WorldBank FOROFFICIALUSEONLY ReportNo. 39593 LIBERIA JOINT STAFFADVISORY NOTE ONTHE INTERIM POVERTY REDUCTIONSTRATEGY PAPER April 25,2007 Poverty ReductionandEconomicManagement4 CountryDepartmentAFCWl Africa Region This documenthasa restricteddistributionand may be usedby recipientsonly inthe performanceof their official duties.Its contentsmay not otherwisebe disclosedwithout World Bankauthorization. INTERNATIONALMONETARY FUNDAND INTERNATIONALDEVELOPMENTASSOCIATION REPUBLIC OF LIBERIA Joint StaffAdvisory Note on the Interim PovertyReductionStrategyPaper Prepared by the staffs o f the International Monetary Fund(IMF) and the International Development Association (IDA) Approved by David Andrews andMatthew Fisher (IMF) andHartwig Schafer (IDA) April 25,2007 I.OVERVIEW 1. Liberiahas undergone profoundchanges in the past threeyears. A country long known for corruption and exploitation o fthe population by a minority, it descended inthe late 1980s into a civil and regional war known for its brutality against civilians. But a spirit o fhope has emerged: after the Accra Comprehensive Peace Agreement o f August 2003 and the UNSecurity Council Resolutions 1509 and 1521, work betweenthe National Transitional Government o f Liberia and partners culminated infree and fair elections inOctober- November 2005. The new government, headed by PresidentEllen Johnson-Sirleaf, took office on January 16,2006. It has since taken action to implement structural reforms to start addressing governance issues, reestablish macroeconomic stability, rebuildinstitutional capacity, and rebuildLiberia's infrastructure. The government's policy framework has receivedwide support from the international community. As a postconflict nation, however, Liberia still faces the complex challenges o f recovery, reconstruction, anddevelopment. 2. The interimPovertyReductionStrategyPaper (I-PRSP) traces the roots of conflictto Liberia's exclusion and marginalizationof much of the population,and lays out a broadvision and programfor July 2006-June 2008. To facilitate rapid economic growth, job creation, poverty reduction, and progress toward the MillenniumDevelopment Goals, it aims to consolidate peace, enhancejustice, deepen democracy, ensure food security, promote human development and steer the nation toward sustainable growth and development. The strategy reflects the many consultations the authorities heldwith other stakeholders; the authorities plan to extend such meetings, as the PRSP process continues. The I-PRSP appropriately considers social issues that affect economic performance such as gender equality, education and training for youth, and HIV/AIDS. 2 3. Inthis Joint StaffAdvisory Note (JSAN), the staffs o fIDAandthe IMFoffer comments and advice on the I-PRSP preparedby the government o f Liberia (submitted to IDA andthe IMFon January 18,2007). 11. GOVERNMENTCOMMITMENTAND OWNERSHIP 4. The government'scommitmentto the I-PRSP's objectivesis reflected inthe central role o f the LiberiaReconstructionand Development Committee (LRDC), chaired by the President, inguiding its development, and by the progress achieved inthe first year o f the government's term inoffice (under the 150-Day Action Plan, the Governance and Economic Management Assistance Program, and the IMF staff-monitored program (SMP)). 111. THEPARTICIPATORYPROCESS 5. The preparationof the I-PRSPhashelpedto start a nationaldialogueon reducingpovertyandcoordinatingreform.The participatory process, which began on M a y 12,2006, infomed the population, donors, and other key stakeholders o f the process; generated information on poverty; and assessedpast and present policies. Participatory discussions involved administrative and technical personnel, elected officials, women and youth leaders, nongovernmentalorganizations, the private sector, and the donor community. County and development superintendents, tribal chiefs, and clan chiefs conducted discussions inLiberia's 15 counties. These discussions, which built on earlier consultations bythe Governance Reform Commission and inthe preparation o fthe Results FocusedTransitional Framework, helped shape the strategic priorities of the I-PRSP. The PRSP process might be strengthenedby expressly seeking participationo f marginalized and conflict-affected groups. It will also be essential to consult extensively with the legislature, given the important role it plays inachieving policy objectives. 6. Inpreparinga full PRSP,the governmentwill needto deepensupportfor its povertyinitiativesamongrepresentativesof nationalinstitutions,especiallythe legislature,and other selected groups, such as returningrefugees,youth, women andex- combatants.The authorities will needto extendconsultations-and delineate the committees or entities responsible for conducting consultations that inform the PRSP-so that the various stakeholders can agree on the policy interventions needed to achieve the PRSP's objectives. The authorities must also continue working to build greater trust among civil society, the government, and Liberia's development partners. IV. THESTRATEGY 7. The I-PRSPsets an ambitiousdevelopmentandpovertyreductionagenda that is supportedby four strategic pillars:enhancingnational security, revitalizing the economy, strengthening governance and the rule o f law, and rehabilitating infrastructure and delivering basic services. Given capacity constraints, limitedresources and an ambitious timeline for 3 preparation o f the full PRSP, it will be important to prioritize which policy interventions will be developed and costed ineach o f the pillars A. Pillar 1: EnhancingNationalSecurity 8. The I-PRSPrightlyidentifiesnationalsecurity as a top priority.Acknowledging past abuses o fthe security forces, the I-PRSP seeks to address the immediate challenges o f lack o f professionalism, absence o f democratic control, poor accountability, weak oversight mechanisms, and inadequate resources. The I-PRSP rightly focuses on assuring that national security agencies can maintain peacekeeping and other functions once the UnitedNations force inLiberia departs. The staffs welcome the government's plans to finish demobilizing and reintegrating ex-combatants and to provide training for at-risk youths. B. Pillar11:Revitalizingthe Economy 9. The staffs agree with the governmentthat the privatesector should bethe main engine of economic growth.The I-PRSP correctly focuses on the sectors that are likelyto recover the fastest: agriculture (including fisheries and rubber), forestry, mining, and urban services. The staffs welcome the government's commitment to a comprehensive and ambitious program o f sound macroeconomic policy reforms to maintain macroeconomic stability, reform tax policy and revenue administration, continue with the disciplined cash- based budget framework, bringtariffs compliant with the planned future Economic Community o f West African States (ECOWAS) common externaltariff, reform state-owned enterprises, revise the investment incentives code to limit discretion and noncompliancewith the tax laws, move toward compliancewith the Kimberly Process and the Extractive Industries Transparency Initiative, and modernize the telecommunications laws. 10. Agricultural sector: An ongoing review o f the sector, together with the national food security and fisheries policies, should revealpolicy options and inform the full PRSP. The policy reforms must emphasize the need for a more integrated approach that addresses the inequalities facing small-holder farmers, which have contributed to the crisis and conflict. Revitalizingthe sector will also require complementary investment ininfrastructure and agricultural markets. The staffs note the government's commitment to address inefficiency in managing abandoned rubber plantations; they urge the authorities to conduct expeditious reviews and competitive tendering o f rubber concessions and other plantation estates. 11. Forestry. The new forestry law and related reforms, including provisions for benefit sharing, social agreements, and environmental assessments, together with capacity-building efforts inthe Forestry Development Agency, should help revive the sector. However, to encourage more and faster growth, the fullPRSP will needto identify ways to streamline the necessary participatoryprocesses used for vetting regulations and forest landuse allocations andfor grantingtimber contracts. 4 12. Mining. The staffs note the absence o fbaseline sector data and welcome the government's commitment to identify opportunities for miningsector development. The constraints to mineral development remain significant: from a lack o f a clear regulatory framework and fiscal regime to poor infrastructure, and lack o f capacity to promote and manage the sector. While some donor-funded activities have beenvaluable insupporting priority areas identifiedby the government inthe I-PRSP, a long-term programmatic approach i s needed for dealing with the issues facing the sector. The full PRSP needs to elaborate a well-plannedprogram o f institutional development for boththe Ministryo f Lands, Mines, and Energy and the Geological Survey. It should include a functional review o f the Ministry; a program o fpolicy, legal, and regulatory development; and measures to buildoperational infrastructure and capacity to regulate andpromotethe miningand petroleum sectors. 13. The full PRSPought to emphasize the importanceof financialsector developmentin stimulatingprivatesector-ledgrowthandruralgrowth.While the I- PRSP acknowledges the impact o f limitedaccess to finance, it focuses only on developing microfinance institutions. The full PRSP should also create a policy framework for strengtheningthe domestic banking sector, including its regulation, and identifypolicies to address institutional barriers to credit such as weak contract enforcement. The PRSP should also discuss plans to strengthenmonetary policy inthe context o f a dollarized environment as well as to develop a modernnational payments system. C. Pillar111: StrengtheningGovernanceandthe Ruleof Law 14. The staffs welcome the broadgoals to lay the foundationfor a new democratic culture, createbalanceddevelopmentthat addresses humanrightsand gender issues, andpromotea cultureof accountability.The governance reforms outlinedwouldhelp the three branches o f government provide neededchecks and balances. The government intends to promote and defendthe rule o f law and human rights. 15. The I-PRSPacknowledgesthe issueof unequalrightsfor men andwomen as well as the abuse ofwomen andchildren.It highlightsthe potential importance o fwomen indecisionmaking and governance. The government's National Gender Policy, which is beingdeveloped with support from donors, will advance this agenda. The fullPRSP must make the case that such issues as gender equality, access to education and work opportunities, and personal safety, also require legal andjudiciary reforms. Therefore, initiatives directed at strengtheninglaws andthejudiciary should emphasize building capacity to address gender-based discrimination and to understandgender-based rights and protection. 16. The governmenthastakenimportantsteps to strengthenpublicfinancial management(PFM), includingaddingtransparencyto budgetpreparation,execution, andreporting.Rigorous application ofthe interim commitment control systemhashelped 5 reverse poor budget implementation, which had facilitated corruption and ledto domestic arrears. However, given its slow pace, the budget execution process needs further improvement. While some improvementshave been made inPFM, the credibility o fbudget executionremains a challenge insofar as the government needs to improve its systems throughout all ministries, particularly inprocurement and internal audit. The PRSP should establish a policy framework andprogram outline to support the move from what i s an unreliable budget-subj ect to in-year cash constraints-to a more robust budget, based on sound macro-fiscal analysis and a mediumterm expenditure framework linked to PRSP objectives. The fullPRSP should also emphasize the importance o f improved budget reporting for effective implementation o f the PRSP andaccountability to stakeholders and more fully describe government efforts inthis area. Timely reporting o frevenues and expenditures would help guide policy choices byproviding an evaluation o fprogress in implementation o fpro-poor spending.To this end, systems improvements will berequired in defining and tracking poverty reduction spending. Strengthening budget transparency and fiduciary systems should also help buildpublic and donor confidence, which would promote the channeling o f donor support through the budget,thus contributingto betterPRSP formulation and implementation. 17. The staffs welcome the commitmentto reformthe government'spayrollandto develop a broader comprehensivecivil service reformprogramwith donor support.The staffs note progress infinalizing the organizational and strategic reviews o f major line ministries and agencies. Giventhe limitedcapacity among middlemanagers ingovernment, the staffs note that the government intendsto create a cadre o f strategically placed policymakers inthe senior executive service (SES), with salaries to be topped up by donors. The staffs urgethe government to ensurethat the SES i s designedand implementedas part o f broader civil service reform to ensure that it i s financially sustainable. This issue will needto be addressedinthe full PRSP. 18. The government'scommitmentto implementits anticorruptionstrategyis welcome. This includes establishing an anticonuption commission. The staffs urgethe government to consult with international partners on the draft legislationto create an independentanticorruption commission andon efforts to secure its financing. D. PillarIV: RehabilitatingInfrastructureandDeliveringBasicServices 19. Liberiafaces massiveneedsto rehabilitateitsinfrastructureandimprovethe delivery ofbasic services. Past efforts to deal with these challenges were ineffectivebecause o f a lack o f socioeconomic data, inadequate government resources, and the government's inability to coordinate and track donor funding and nongovernmental organizations' activities (which represent about two-thirds o f the sector's total funding). The plannedphaseout o f these humanitarianreliefprograms providing basic social services poses challenges to even the maintenance o fexisting, inadequate capacity. 6 20. The full PRSP will needto address infrastructure issues in a deeper and more comprehensive way. The Ministry o f Public Works should establish priorities for rehabilitationover the next four years and ensure that maintenance costs o frehabilitated infrastructure are integrated into the annual budgetprocess. Inthe water sector, the PRSP needs to distinguishbetweenthe needs o f urban, small towns, andrural areas, with each having different capital investmentneeds anddifferent methods for operating and maintaining facilities. There have been significant developments inthe sector and plans for future investments possiblywith someprivate funds, which havenot beencaptured inthe I- PRSP. The government's efforts to improve the power sector should include rebuilding capacity at the Liberia Electricity Corporation. 21. Education: The I-PRSP recognizes the link between humanresource development and public sector capacities. Capacity inthe public sector i s severely strained by several factors, including the large number o fnew students enrolling inschools following the abolition o f fees, and a dearth o f qualified teachers. Inaddition, available external financing i s either fragmented or aimed at noncore activities providing little assistance for either improving public service deliveryor filling the budget gap. To address these core problems, the government and donors have started to develop an education sector planthat focuses on the public sector's ability to assureuniversalprimaryandbasic education; it will identifythe key policies and resources needed to assurethis fundamental objective. 22. Health; The I-PRSP recognizes the major challenges facing the health sector and identifies key healthindicators, including mortality rates, malnutrition rates, immunization rates, and anti-malaria and HIV/AIDs efforts. The commitment to complete a national health planis also commendable. The full PRSP needs to more clearly address several other health sector issues, such as reducing systemic inefficiencies and improving operations management, attracting additional investments ininfrastructure, developing human resources, and identifying ways to fund recurrent expenditures. V. POVERTY DIAGNOSTICS 23. The I-PRSP does not contain a satisfactory diagnostic of poverty owing to the lack of comprehensive poverty data, but does recognize the needfor capacity building and support in this area. The lack of reliable and comprehensive householdexpenditure data i s a critical challenge to developingthe PRSP. The population census was last conducted over 20 years ago, economic statistics are limitedto Monrovia, and routine data collection at service delivery agencies has collapsed. The authorities are encouraged to finalize the National Statistical Strategy and identifypriority statistical activities for funding under the PRSP. More immediately a Demographic and Health Survey inearly 2007 will be followed by a Core Welfare Indicators Questionnaire surveycontaining a household consumption module. These surveys will be the basis o f a poverty profile for the PRSP. Timely completion o f these surveys would help ensure that the full PRSP can be completed inearly 2008. The National Population and Housing Census, planned for March2008 but facing a 7 significant h d i n ggap, i s urgentlyneededto create spatially disaggregated demographic and social statistics and an up-to-date samplingframe. VI. THEMACROECONOMIC FRAMEWORK 24. Notwithstandingsevere datalimitations,the I-PRSPprovidesthe basic elements ofthe medium-termmacroeconomic framework,including (a) sustaining medium-term GDP growth o f 7-8 percent; (b) maintaining price stability; (c) building foreign exchange reserves consistent with the objective o fmaintaining relative exchange rate stability; and (d) increasing government revenues. Inthe full PRSP,a more comprehensive framework should be developed to analyze how policies and objectives support sustained growth, macroeconomic stability, and poverty reduction. Inparticular, the full PRSP should describe (a) potential sources o f growth; (b) monetary policy and the external sector; and (c) the fiscal framework. This should include more detailedmedium-termprojections for growth, inflation, balance o fpayments, and revenues and expenditures to highlight the expected impact o f individual policies and identify the unfundedelements o f the PRSP. 25. Potential sources of growth: The I-PRSP notes that GDP growth will be drivenby improved security on rubber plantations, investment inthe iron ore sector, the effect o f the lifting o fUNexport sanctions on timber and diamonds, and strengthened agricultural, manufacturing, and service sectors. Further details on upside and downside risks to each sector would highlight the importance o fparticular reforms aimed at increasingpotential growth and stability. While the I-PRSP presents a useful descriptiono f efforts to address the employment crisis inthe short-run, the full strategy paper should present medium-term growth scenarios, and assess their consistency with poverty-reduction objectives. 26. Monetarypolicy and the external sector: As noted inthe I-PRSP, the primary objective o fmonetary policy i s to maintainprice stability. The staffs agree this i s essential to promote investment, growth and poverty reduction, and gradual market-driven de- dollarization. The full PRSP couldpresent a more detailed description o fplannedreforms to strengthenthe monetary policy framework, including the introduction ofnew policy instruments, and describe efforts to strengthenthe balance sheet o f the centralbank, a condition neededto make monetary policy more effective. The full PRSP will also need to provide more detail on policies to develop the financial sector and how the sector's revitalization would stimulate private sector-led growth. While the I-PRSPprojects a wideningo fthe current account deficit, more detail onwhat is drivingthis projection, the potential risks, and policy options to address external shocks would be welcome. It should also outline the trade policy agenda for 2008-1 1,includingpolicies governing import licenses and implementation o fthe plannedfuture ECOWAS common external tariff. 27. Public Debt: The I-PRSP recognizes the needto address Liberia's unsustainable external debt, a large share o fwhich i s inarrears. As part o f its immediate response, the government i s committed to continue strengthening economic management under the SMP 8 and to fulfill the requirements for arrears clearance and early comprehensive debt relief under the Enhanced HIPC Initiative. The staffs also welcome the government's strategy to tackle its heavy burdeno f domestic debt and arrears. Inthis context, the full PRSPwill needto elaborate a program for strengthening debt management capacity, and a strategy for mobilizing financing to meet Liberia's development needs over the medium term. 28. Fiscalpolicy framework: The I-PRSP describes efforts to increase government revenues, including a further strengtheningo f tax and customs administration and continued reduction o ftax exemptions. The full PRSP will needto present medium-term revenue and expenditure projections, including data on medium-termplans for pro-poor spending. Inview o f Liberia's unsustainable domestic and external debt, Liberia will needto pursuea balanced budget(after grants) inthe foreseeable future. Onpublic financial management, important steps have beentaken to implement an interim commitment control, which i s essential to improve budget implementationand increase donor confidence. The full PRSP could provide more details on planned efforts to address capacity constraints and improve budget implementation, including the timely implementation o f line ministries' expenditureplans. VII. IMPLEMENTATION, MONITORING, AND EVALUATION 29. The governmenthas taken importantsteps to implement,monitor,andevaluate the I-PRSP.The LRDC, which is chaired bythe President and hasrepresentatives from major development partners, civil society, and nongovernmental agencies, i s proving to be a useful management framework for the I-PRSP. It has four pillar committees inline with the I-PRSP. The staffs encourage the authorities to use this framework as a platform to promote transparency, to review I-PRSP implementation progress, and encourage donors to align their priorities with those o f the I-PRSP and the budget. 30. The successful preparation,implementation,and monitoringof the PRSPwill depend on the availabilityof resources and adequatelocalcapacity.Adequate budgetary resources will needto be allocated to buildthe capacity at the planning ministry to carry out monitoring and evaluationtasks, PRSP-related thematic and sectoral studies, and PRSP- related workshops and seminars. This plan must take into account the realistic amount o f financial and human resources available, which means that the reform agenda included inthe PRSP should beprioritized andproperly sequenced, recognizing the tradeoff between timeliness and comprehensiveness inpreparingthe PRSP, and within that PRSP assuring that implementation plans permit less urgentprograms to be cut or postponed ifavailable financing falls short. Coordination among donors and the government i s essential to assure the provision o f adequate finance and technical services to complete, implement and monitor the PRSP and its priority elements. 31. There are significantrisksto the implementationof the I-PRSP.The I-PRSPis an ambitious document, serving notjust as an interim document but a fullpoverty reduction 9 strategy for two years. However, the Government lacks the human and financial capacity to implementsuch a strategy. While further prioritization would have established priorities if resources are inadequate, donors mustbe prepared to mitigate this risk through technical and financial assistanceto the areas o f highest priority. 32. The I-PRSPoutlines an ambitiouspathto completea fullPRSPinearly 2008. Data limitations, public and private sector capacity constraints, human resource issues, and weak communications strategies could put that goal at risk. It will also be important to maintain a good working relationshipbetweenthe government and the legislature. The participatory process could result ina long list o f demands and create public expectations that cannot be met. To mitigate this risk, the staffs recommend that the participatory process identifystrategic options and priority actions inareas o f consensus and analyze trade-offs. Early emphasis on participatory monitoring and evaluation o f existing policies, inclose coordination with local line ministries responsible for service delivery, could help participants better understandexisting constraints and ensure that a realistic and concrete approach i s taken. Delays inmeetingthe ambitious deadline for finalizing the PRSP could relate to Liberia's long and intense rainy season, resource constraints, and poor road and telecommunication infrastructures. 33. Commitmentto fiscal disciplineandmacroeconomic stabilityare importantto sustainingthe implementationof the I-PRSPand facilitating the timely completion ofthe fullPRSP. The staffs therefore urgethe authorities to continuetheir ambitious agendaof policyreforms and continue seeking financing assurances needed to initiate the process of debtreliefunder the HIPC Initiative. The fullPRSP should assess the implications o f a potential substantial increase indonor inflows and public expenditure. 34. Continuedpartnercommitmentis requiredbothto overcome eventual cutbacks in humanitarian and security assistanceas the conflict recedes and to assure the additional resources and technical assistancerequired for priority actions. IX. CONCLUSIONS 35. The I-PRSPsets out an ambitious2 year programto consolidatepeace, improve nationalsecurity, rebuildkey legal anddemocraticinstitutions(includinginthe public sector), promoteprivatesector-ledeconomic revitalization,andfurther reducepoverty. It also lays out a timetable to complete the fullPRSPby early 2008, which may prove too ambitious ifprogress indevelopingbaseline poverty and other sectoral data i s slow. More time may also beneededto conduct credible consultations withthe public and other stakeholders. The prioritizationprocess may requireweighing the tradeoff between speed and comprehensiveness o fthe next set o freforms inwhat will be a continuingprocess. 36. Accordingly,moresteps should betaken to expandthe participatoryprocess so that the full PRSP can be created and institutedas soon as possible. 10 37. The government must act quickly to buildstatistical capacity and assemble reliable baseline data on poverty, demographics, andkey economic sectors. Strategic plans for the agriculture, mining, and forestry sectors will require more detailed data on production, employment, and other trends. The absence o fnational income statistics also poses major problems to the design o f long-term growth strategies aimed at reducingpoverty. The full PRSP would benefit from the preparationo f in-depthsectoral studies on important areas, including productive sectors, such as mining, agriculture, andforestry, as well social sectors, such as health, education, and the water supply. There will also be a need for thematic studies on cross-cutting themes, such as governance and gender equity. 38. There i s a need to strengthen capacity in the public sector. While some improvements have beenmade inthe area o fpublic financial management, the credibility o f the budgetremains a challenge and will limit the effectiveness o fthe I-PRSP, unless adequate attention i s paid to it. Prompt action on civil service reform with financial and technical support from donors i s critical. It i s especially important to ensure that the senior executive service i s sustainable and fully integrated inthe reform program. 39. Strategies inthe I-PRSPand PRSP to develop key sectors need to be fully costed, so that the government can assess financing needs, prioritize programs, and develop a macroeconomic framework to sustain its strategy. 40. Finally, the government must better coordinate aid from its development partners to ensure that donor financing is aligned with the PRSPpriorities. This is especially important given the limitedresources inthe cash-basedbalanced budget and continued largeaid flows outside the budget. x.ISSUES FORDISCUSSION EXECUTIVE BY DIRECTORS 41. Inconsideringthe authorities' I-PRSPand associatedJSAN, Executive Directors' views are sought on whether they agree with the main areas identifiedby staffs as priorities for strengthening the I-PRSP and its implementation. Director's views are also sought on whether they concur with the areas identifiedby staffs as key implementation risks. Documentof The World Bank FOROFFICIAL USEONLY ReportNo. 39593 LIBERIA JOINT STAFFADVISORY NOTE ONTHE INTERIM POVERTYREDUCTION STRATEGY PAPER April 25,2007 PovertyReduction and EconomicManagement4 CountryDepartmentAFCWl Africa Region This document hasa restricteddistributionand maybeusedby recipientsonlyinthe performanceof their officialduties. Its contents may nototherwisebe disclosedwithout World Bankauthorization. INTERNATIONALMONETARYFUNDAND INTERNATIONALDEVELOPMENTASSOCIATION REPUBLIC OF LIBERIA Joint StaffAdvisory Note on the InterimPovertyReductionStrategy Paper Prepared by the staffs o f the International Monetary Fund(IMF) and the International Development Association (IDA) Approved by David Andrews andMatthew Fisher(IMF) and Hartwig Schafer (IDA) April 25,2007 I.OVERVIEW 1. Liberiahas undergoneprofoundchanges inthe pastthreeyears. A country long known for corruption and exploitation o fthe populationby a minority, it descended inthe late 1980s into a civil and regional war known for its brutality against civilians. But a spirit o fhope has emerged: after the Accra Comprehensive Peace Agreement o f August 2003 and the UNSecurity Council Resolutions 1509 and 1521, work betweenthe National Transitional Government o f Liberia and partners culminated infree and fair elections inOctober- November 2005. The new government, headed by President EllenJohnson-Sirleaf, took office on January 16,2006. Ithas since taken action to implement structural reforms to start addressing governance issues, reestablish macroeconomic stability, rebuildinstitutional capacity, and rebuildLiberia's infrastructure. The government's policy framework has receivedwide support from the international community. As a postconflict nation, however, Liberia still faces the complex challenges o f recovery, reconstruction, and development. 2. The interimPovertyReductionStrategyPaper (I-PRSP)traces the rootsof conflictto Liberia's exclusion and marginalizationof much of the population,andlays out a broadvision andprogramfor July 2006June 2008. To facilitate rapideconomic growth, job creation, poverty reduction, and progress toward the MillenniumDevelopment Goals, it aims to consolidate peace, enhancejustice, deepen democracy, ensure food security, promote human development and steer the nation toward sustainable growth and development. The strategy reflects the manyconsultations the authorities heldwith other stakeholders; the authorities plan to extend such meetings, as the PRSP process continues. The I-PRSP appropriately considers social issues that affect economic performance such as gender equality, education and training for youth, and HIV/AIDS. 2 3. Inthis Joint StaffAdvisory Note (JSAN), the staffs o fIDAandthe IMFoffer comments and advice on the I-PRSP preparedby the government o f Liberia (submitted to IDA andthe IMFon January 18,2007). 11. GOVERNMENTCOMMITMENTAND OWNERSHIP 4. The government'scommitmentto the I-PRSP's objectivesis reflected inthe central role o f the LiberiaReconstructionand Development Committee (LRDC), chaired by the President, inguiding its development, and by the progress achieved inthe first year o f the government's term inoffice (under the 150-Day Action Plan, the Governance and Economic Management Assistance Program, and the IMF staff-monitored program (SMP)). 111. THEPARTICIPATORYPROCESS 5. The preparationof the I-PRSPhashelpedto start a nationaldialogueon reducingpovertyandcoordinatingreform.The participatory process, which began on M a y 12,2006, infomed the population, donors, and other key stakeholders o f the process; generated information on poverty; and assessedpast and present policies. Participatory discussions involved administrative and technical personnel, elected officials, women and youth leaders, nongovernmentalorganizations, the private sector, and the donor community. County and development superintendents, tribal chiefs, and clan chiefs conducted discussions inLiberia's 15 counties. These discussions, which built on earlier consultations bythe Governance Reform Commission and inthe preparation o fthe Results FocusedTransitional Framework, helped shape the strategic priorities of the I-PRSP. The PRSP process might be strengthenedby expressly seeking participationo f marginalized and conflict-affected groups. It will also be essential to consult extensively with the legislature, given the important role it plays inachieving policy objectives. 6. Inpreparinga full PRSP,the governmentwill needto deepensupportfor its povertyinitiativesamongrepresentativesof nationalinstitutions,especiallythe legislature,and other selected groups, such as returningrefugees,youth, women andex- combatants.The authorities will needto extendconsultations-and delineate the committees or entities responsible for conducting consultations that inform the PRSP-so that the various stakeholders can agree on the policy interventions needed to achieve the PRSP's objectives. The authorities must also continue working to build greater trust among civil society, the government, and Liberia's development partners. IV. THESTRATEGY 7. The I-PRSPsets an ambitiousdevelopmentandpovertyreductionagenda that is supportedby four strategic pillars:enhancingnational security, revitalizing the economy, strengthening governance and the rule o f law, and rehabilitating infrastructure and delivering basic services. Given capacity constraints, limitedresources and an ambitious timeline for 3 preparation o f the fullPRSP, it will be important to prioritize which policy interventions will be developed and costed ineach o f the pillars A. Pillar 1: Enhancing National Security 8. The I-PRSP rightly identifies national security as a top priority. Acknowledging past abuses o f the security forces, the I-PRSP seeks to address the immediate challenges o f lack o fprofessionalism, absence o f democratic control, poor accountability, weak oversight mechanisms, and inadequate resources. The I-PRSPrightly focuses on assuring that national security agencies can maintain peacekeeping and other functions once the UnitedNations force inLiberia departs. The staffs welcome the government's plans to finish demobilizing and reintegrating ex-combatants andto provide training for at-risk youths. B. Pillar 11: Revitalizing the Economy 9. The staffs agree with the government that the private sector should be the main engine of economic growth. The I-PRSP correctly focuses on the sectors that are likely to recover the fastest: agriculture (including fisheries and rubber), forestry, mining, and urban services. The staffs welcome the government's commitment to a comprehensive and ambitious program o f sound macroeconomic policy reforms to maintain macroeconomic stability, reform tax policy and revenue administration, continue with the disciplined cash- based budget framework, bringtariffs compliant with the planned future Economic Community o f West African States (ECOWAS) common external tariff, reform state-owned enterprises, revise the investment incentives code to limit discretion and noncompliance with the tax laws, move toward compliance with the KimberlyProcess and the Extractive IndustriesTransparency Initiative, and modernize the telecommunications laws. 10. Agricultural sector: An ongoing review o f the sector, together with the national food security and fisheries policies, shouldrevealpolicy options and informthe full PRSP. The policy reforms must emphasize the needfor a more integrated approach that addresses the inequalities facing small-holder farmers, which have contributed to the crisis and conflict. Revitalizingthe sector will also require complementary investment ininfrastructure and agricultural markets. The staffs note the government's commitment to address inefficiency in managing abandoned rubberplantations; they urge the authorities to conduct expeditious reviews and competitive tendering o frubber concessions and other plantationestates. 11. Forestry. The new forestry law and relatedreforms, including provisions for benefit sharing, social agreements, and environmental assessments, together with capacity-building efforts inthe Forestry Development Agency, should help revive the sector. However, to encourage more and faster growth, the full PRSP will need to identify ways to streamline the necessary participatoryprocesses usedfor vetting regulations and forest landuse allocations and for granting timber contracts. 4 12. Mining. The staffs note the absence ofbaseline sector data and welcome the government's commitment to identify opportunities for miningsector development. The constraints to mineral development remain significant: from a lack o f a clear regulatory framework and fiscal regimeto poor infrastructure, and lack o f capacity to promote and manage the sector. While some donor-funded activities have been valuable in supporting priority areas identifiedby the government inthe I-PRSP, a long-tern programmatic approach i s neededfor dealing with the issues facing the sector. The full PRSP needs to elaborate a well-planned program o f institutional development for both the Ministryo f Lands, Mines, and Energy and the Geological Survey. It should include a functional review o f the Ministry; a program o fpolicy, legal, and regulatory development; and measures to buildoperational infrastructure and capacity to regulate andpromotethe miningand petroleum sectors. 13. The full PRSPought to emphasize the importanceof financialsector development in stimulatingprivate sector-ledgrowth and ruralgrowth.While the I- PRSP acknowledges the impact o f limitedaccess to finance, it focuses only on developing microfinance institutions. The full PRSP should also create a policy framework for strengthening the domestic banking sector, including its regulation, and identify policies to address institutional barriers to credit such as weak contract enforcement. The PRSP should also discuss plans to strengthenmonetary policy inthe context o f a dollarized environment as well as to develop amodernnationalpayments system. C. Pillar 111: StrengtheningGovernanceand the Ruleof Law 14. The staffs welcome the broad goals to lay the foundationfor a new democratic culture, createbalanceddevelopment that addresses humanrights and gender issues, and promotea cultureof accountability.The governance reforms outlined would help the three branches o f government provide neededchecks and balances. The government intends to promote and defendthe rule o f law and human rights. 15. The I-PRSPacknowledges the issue of unequalrightsfor men and women as well as the abuse of women and children.Ithighlightsthe potential importance o fwomen indecisionmakingand governance. The government's National Gender Policy, which is beingdeveloped with support from donors, will advance this agenda. The fullPRSP must makethe casethat such issues as gender equality, access to education andwork opportunities, and personal safety, also require legal andjudiciary reforms. Therefore, initiatives directed at strengthening laws and the judiciary should emphasize building capacity to address gender-based discrimination andto understand gender-based rights and protection. 16. The governmenthas taken importantsteps to strengthen public financial management (PFM), includingadding transparencyto budgetpreparation,execution, and reporting.Rigorous applicationofthe interimcommitment control system has helped 5 reverse poor budget implementation, which had facilitated corruption and ledto domestic arrears. However, given its slow pace, the budget execution process needs further improvement. While some improvementshave been made inPFM, the credibility o fbudget executionremains a challenge insofar as the government needs to improve its systems throughout all ministries,particularly inprocurement and internal audit. The PRSP should establish a policy framework andprogram outline to support the move from what i s an unreliable budget-subject to in-year cash constraints-to a more robust budget, based on sound macro-fiscal analysis and a mediumterm expenditure framework linked to PRSP objectives. The full PRSP should also emphasize the importance o f improved budget reporting for effective implementationo fthe PRSP and accountability to stakeholders and more fully describe government efforts inthis area. Timely reporting o f revenues and expenditureswould help guidepolicy choices byproviding an evaluation o fprogress in implementation o fpro-poor spending.To this end, systems improvements will be required in defining and tracking poverty reduction spending. Strengthening budget transparency and fiduciary systems should also help buildpublic and donor confidence, which would promote the channeling o fdonor support through the budget,thus contributingto betterPRSP formulation and implementation. 17. The staffs welcome the commitmentto reformthe government'spayrollandto develop a broader comprehensivecivil service reformprogramwith donor support.The staffs note progress infinalizing the organizational and strategic reviews o f major line ministries and agencies. Giventhe limitedcapacity among middle managers ingovernment, the staffs note that the government intends to create a cadre o f strategically placed policymakers inthe senior executive service (SES), with salaries to be topped up by donors. The staffs urge the government to ensure that the SES i s designed and implemented as part o f broader civil service reform to ensure that it i s financially sustainable. This issue will needto be addressedinthe full PRSP. 18. The government'scommitmentto implementits anticorruptionstrategyis welcome. This includes establishing an anticorruption commission. The staffs urgethe government to consult with international partners on the draft legislationto create an independentanticorruption commission andon efforts to secure its financing. D. PillarIV: RehabilitatingInfrastructureandDeliveringBasicServices 19. Liberiafaces massiveneedsto rehabilitateitsinfrastructureandimprovethe deliveryofbasic services. Past efforts to deal with these challenges were ineffectivebecause o f a lack o f socioeconomic data, inadequate government resources, and the government's inability to coordinate and track donor funding and nongovernmental organizations' activities (which represent about two-thirds o fthe sector's total funding). The plannedphaseout o f these humanitarianreliefprograms providing basic social services poses challenges to even the maintenance o f existing, inadequate capacity. 6 20. The full PRSPwill needto address infrastructureissues in a deeper and more comprehensiveway. The Ministry ofPublic Works should establishpriorities for rehabilitationover the next four years and ensure that maintenance costs o frehabilitated infrastructure are integrated into the annual budgetprocess. Inthe water sector, the PRSP needs to distinguishbetweenthe needs o f urban, small towns, andrural areas, with each having different capital investmentneeds anddifferent methods for operating and maintaining facilities. There have been significant developments inthe sector and plans for futureinvestments possiblywith someprivate funds, which havenot beencaptured inthe I- PRSP. The government's efforts to improve the power sector should include rebuilding capacity at the Liberia Electricity Corporation. 21, Education: The I-PRSP recognizes the link between humanresource development and public sector capacities. Capacity inthe public sector i s severely strained by several factors, including the large number o fnew students enrolling inschools following the abolition o f fees, and a dearth o f qualified teachers. Inaddition, available external financing i s either fragmented or aimed at noncore activities providing little assistance for either improving public service deliveryor filling the budget gap. To address these core problems, the government and donors have started to develop an education sector planthat focuses on the public sector's ability to assureuniversal primary andbasic education; it will identify the key policies and resources needed to assurethis fundamental objective. 22. Health; The I-PRSP recognizes the major challenges facing the health sector and identifies key healthindicators, including mortality rates, malnutrition rates, immunization rates, and anti-malaria and HIV/AIDs efforts. The commitment to complete a national health plan i s also commendable. The full PRSP needs to more clearly address several other health sector issues, such as reducing systemic inefficiencies and improving operations management, attracting additional investments ininfrastructure, developing human resources, and identifying ways to fund recurrent expenditures. V. POVERTY DIAGNOSTICS 23. The I-PRSPdoes not containa satisfactorydiagnosticof povertyowingto the lack of comprehensivepovertydata,butdoes recognizethe needfor capacitybuilding andsupport in this area. The lack ofreliable and comprehensive household expenditure data i s a critical challenge to developing the PRSP. The population census was last conducted over 20 years ago, economic statistics are limitedto Monrovia, and routine data collection at service delivery agencies has collapsed. The authorities are encouraged to finalize the National Statistical Strategy and identifypriority statistical activities for fundingunder the PRSP. More immediately a Demographic and Health Surveyinearly 2007 will be followed by a Core Welfare Indicators Questionnaire survey containing ahousehold consumption module. These surveys will be the basis o f a poverty profile for the PRSP. Timely completion o fthese surveys would help ensure that the full PRSP can be completed inearly 2008. The National Population and Housing Census, planned for March2008 but facing a 7 significant hnding gap, i s urgentlyneededto create spatially disaggregated demographic and social statistics and an up-to-date samplingframe. VI. THEMACROECONOMIC FRAMEWORK 24. Notwithstandingsevere datalimitations,the I-PRSPprovidesthe basic elements ofthe medium-termmacroeconomic framework,including (a) sustaining medium-term GDP growth o f 7-8 percent; (b) maintaining price stability; (c) building foreign exchange reserves consistent with the objective o f maintaining relative exchange rate stability; and (d) increasing government revenues. Inthe full PRSP, a more comprehensive framework should be developed to analyze how policies andobjectives support sustained growth, macroeconomic stability, and poverty reduction. Inparticular, the full PRSP should describe (a) potential sources o f growth; (b) monetary policy and the external sector; and (c) the fiscal framework. This should include more detailed medium-term projections for growth, inflation, balance o fpayments, and revenues and expenditures to highlight the expected impact o f individual policies and identify the unfunded elements o f the PRSP. 25. Potential sources ofgrowth: The I-PRSP notes that GDP growth will be driven by improved security on rubber plantations, investmentinthe iron ore sector, the effect o f the lifting o fUNexport sanctions on timber anddiamonds, andstrengthened agricultural, manufacturing, and service sectors. Furtherdetails on upside and downside risks to each sector would highlightthe importance o fparticular reforms aimed at increasingpotential growth and stability. While the I-PRSP presents a useful description o f efforts to address the employment crisis inthe short-run, the full strategy paper should present medium-term growth scenarios, and assess their consistency with poverty-reduction objectives. 26. Monetarypolicy and the external sector: As noted inthe I-PRSP, the primary objective o f monetary policy i s to maintainprice stability. The staffs agree this i s essential to promote investment, growth and poverty reduction, and gradual market-drivende- dollarization. The full PRSP could present a more detailed description o fplannedreforms to strengthen the monetary policy framework, including the introduction o fnew policy instruments, and describe efforts to strengthen the balance sheet o fthe centralbank, a condition neededto make monetary policymore effective. The full PRSP will also needto provide more detail on policies to develop the financial sector and how the sector's revitalization would stimulate private sector-led growth. While the I-PRSPprojects a wideningo fthe current account deficit, more detail onwhat is drivingthis projection, the potential risks, and policy options to address external shocks would be welcome. It should also outline the trade policy agenda for 2008-1 1, includingpolicies governing import licenses and implementation o fthe planned future ECOWAS common external tariff. 27. Public Debt: The I-PRSP recognizes the need to address Liberia's unsustainable external debt, a large share o fwhich i s inarrears. As part o f its immediate response, the government i s committed to continue strengthening economic management under the SMP 8 and to fulfill the requirements for arrears clearance and early comprehensive debt reliefunder the Enhanced HIPC Initiative. The staffs also welcome the government's strategy to tackle its heavy burdeno f domestic debt and arrears. Inthis context, the full PRSP will need to elaborate aprogram for strengtheningdebt management capacity, and a strategy for mobilizing financing to meet Liberia's development needs over the medium term. 28. Fiscalpolicy framework: The I-PRSP describes efforts to increase government revenues, including a further strengtheningo f tax and customs administration and continued reduction o ftax exemptions. The full PRSP will need to present medium-termrevenue and expenditure projections, including data on medium-termplans for pro-poor spending. Inview o f Liberia's unsustainable domestic and external debt, Liberia will needto pursuea balanced budget (after grants) inthe foreseeable future. Onpublic financial management, important steps have beentaken to implement an interim commitment control, which i s essential to improve budget implementationand increase donor confidence. The full PRSP could provide more details on planned efforts to address capacity constraints and improve budget implementation, including the timelyimplementation o f line ministries' expenditureplans. VII. IMPLEMENTATION,MONITORING, AND EVALUATION 29. The governmenthas taken importantsteps to implement,monitor,andevaluate the I-PRSP.The LRDC, which is chaired bythe President and hasrepresentatives from major development partners, civil society, and nongovernmental agencies, i s proving to be a useful management framework for the I-PRSP. It has four pillar committees inline with the I-PRSP. The staffs encourage the authorities to use this framework as a platform to promote transparency, to review I-PRSP implementation progress, and encourage donors to align their priorities with those o f the I-PRSP and the budget. 30. The successfulpreparation,implementation,andmonitoringof the PRSPwill depend on the availabilityof resourcesandadequatelocalcapacity.Adequate budgetary resources will need to be allocated to buildthe capacity at the planning ministryto carry out monitoring and evaluationtasks, PRSP-related thematic and sectoral studies, and PRSP- related workshops and seminars. This plan must take into account the realistic amount o f financial and human resources available, which means that the reform agenda included inthe PRSP should be prioritized andproperly sequenced, recognizingthe tradeoff between timeliness and comprehensiveness inpreparing the PRSP, and within that PRSP assuring that implementation plans permit less urgentprograms to be cut or postponed if available financing falls short. Coordination among donors and the government i s essential to assure the provision o f adequate finance and technical services to complete, implement and monitor the PRSP and its priority elements. 31. There are significantrisksto the implementationof the I-PRSP.The I-PRSPis an ambitious document, serving notjust as an interim document but a fullpoverty reduction 9 strategy for two years. However, the Government lacks the human and financial capacity to implementsuch a strategy. While further prioritization would have established priorities if resources are inadequate, donors mustbe prepared to mitigate this risk through technical and financial assistanceto the areas o f highest priority. 32. The I-PRSPoutlinesan ambitiouspathto completea fullPRSPinearly 2008. Data limitations, public and private sector capacity constraints, human resource issues, and weak communications strategies could put that goal at risk. It will also be important to maintain a good working relationshipbetweenthe government and the legislature. The participatoryprocess could result ina long list o f demands and create public expectations that cannot be met.To mitigate this risk, the staffs recommend that the participatory process identify strategic options andpriority actions inareas o f consensus and analyze trade-offs. Early emphasis on participatory monitoring and evaluation o f existingpolicies, inclose coordination with local line ministries responsible for service delivery, could help participants better understand existing constraints and ensure that a realistic and concrete approach i s taken. Delays inmeeting the ambitious deadline for finalizing the PRSP could relate to Liberia's long and intense rainy season, resource constraints, and poor road and telecommunication infrastructures. 33. Commitmentto fiscal disciplineand macroeconomic stabilityare importantto sustainingthe implementationof the I-PRSPand facilitating the timely completion o fthe fullPRSP. The staffs therefore urgethe authorities to continuetheir ambitious agendaof policyreforms and continue seeking financing assurances needed to initiate the process o f debt reliefunderthe HIPC Initiative. The fullPRSP should assess the implications o f a potential substantial increase indonor inflows andpublic expenditure. 34. Continuedpartnercommitmentis requiredbothto overcome eventual cutbacks in humanitarian and security assistance as the conflict recedes and to assure the additional resources and technical assistancerequired for priority actions. IX. CONCLUSIONS 35. The I-PRSPsets out an ambitious2 year programto consolidatepeace, improve nationalsecurity, rebuildkeylegal anddemocraticinstitutions(includinginthe public sector),promoteprivatesector-ledeconomic revitalization,andfurther reducepoverty. It also lays out a timetable to complete the full PRSP by early 2008, which mayprove too ambitious ifprogress indevelopingbaseline poverty and other sectoral data i s slow. More timemay also be neededto conduct credible consultations with the public and other stakeholders. The prioritization process may require weighing the tradeoff between speed and comprehensiveness o fthe next set o freforms inwhat will be a continuing process. 36. Accordingly,moresteps should betaken to expandthe participatoryprocess so that the full PRSP can be created and institutedas soon as possible. 10 37. The government must act quickly to buildstatistical capacity and assemble reliable baseline data on poverty, demographics, andkey economic sectors. Strategic plans for the agriculture, mining, and forestry sectors will require more detailed data on production, employment, and other trends. The absence o fnational income statistics also poses major problems to the design o f long-term growth strategies aimed at reducingpoverty. The full PRSP would benefit from the preparationo f in-depthsectoral studies on important areas, including productive sectors, such as mining, agriculture, andforestry, as well social sectors, such as health, education, and the water supply. There will also be a need for thematic studies on cross-cutting themes, such as governance and gender equity. 38. There i s a need to strengthen capacity in the public sector. While some improvements have beenmade inthe area o fpublic financial management, the credibility o f the budgetremains a challenge and will limit the effectiveness o fthe I-PRSP, unless adequate attention i s paid to it. Prompt action on civil service reform with financial and technical support from donors i s critical. It i s especially important to ensure that the senior executive service i s sustainable and fully integrated inthe reform program. 39. Strategies inthe I-PRSPand PRSP to develop key sectors need to be fully costed, so that the government can assess financing needs, prioritize programs, and develop a macroeconomic framework to sustain its strategy. 40. Finally, the government must better coordinate aid from its development partners to ensure that donor financing is aligned with the PRSPpriorities. This is especially important given the limitedresources inthe cash-basedbalanced budget and continued largeaid flows outside the budget. x.ISSUES FORDISCUSSION EXECUTIVE BY DIRECTORS 41. Inconsideringthe authorities' I-PRSPand associatedJSAN, Executive Directors' views are sought on whether they agree with the main areas identifiedby staffs as priorities for strengthening the I-PRSP and its implementation. Director's views are also sought on whether they concur with the areas identifiedby staffs as key implementation risks. FOREWORD The inauguration of the government on 16 January 2006 following national elections in 2005 was a watershed in the history of Liberia. The elections symbolized the people's desire for peace, reconciliation, stability and development. They also served as a wake up call to break from past government misrule, violence, divisiveness, human rights abuses and economic mismanagement, all of which shattered the lives of Liberians. Expressing their collective will through national elections, Liberians articulated their desire to build a new nation a Liberia that is peaceful, secure, prosperous, inclusive and provides economic opportunities to the benefit of all. We have clearly heard the call of the people, and my government is fully responsiveto the challenges facing our nation. A t the core of these challenges is deep and pervasive poverty. My government inherited a Liberia in which well over three quarters of the population live below the poverty line of 1 United States Dollar per day, while about half the nation lives in severe poverty. This is unacceptable. The current unemployment of an overwhelming majority of Liberia's people, mainly youth, is also an unacceptable fact that needs to be reversed. Access to and delivery of basic services such as health, education and potable water is severely restricted for most people. Collapsed national and local institutions and structures have resulted in very poor governance and widespread corruption. Food insecurity prevails, which only exacerbates poverty. Gender disparities and violence against women are deep social maladies. Structural deficiencies and deficits in key areas such as information and statistics, media, laws, regulations and policies also contribute t o the challenge of rebuilding. The people of Liberia deserve a better life and their call for it imposes on all of us m y government, the international community, regional partners, civil society, academics and well wishers of Liberia an urgent call to action to overcome these challenges. Deepening poverty in Liberia is not only a threat to national peace and security, it is also a threat to the entire region and to the world order. Therefore, my government has accorded the top-most priority to addressing these challenges, in particular, arresting national economic and social decline, maintaining peace and security while responding to the deep wounds of the civil war, enhancing accountable governance to facilitate reconstruction and significant poverty reduction and promoting reconciliation. We have undertaken the first steps in collaboration with our people and our development . partners. A key response was the 150-Day Action Plan that my government successfully concluded. Though w e have achieved some results, the road is long and challenges remain. Limited basic services have been restored, the beginnings of democratic governance initiated, economic performance has improved with prospects looking brighter and peace and security have been maintained. These visible changes, although small in comparison to what needs to be done, have renewed hope for Liberians and created a belief that their future will be brighter tomorrow. This Interim Poverty Reduction Strategy is a part of the continuum of such efforts. It centers on consolidating national peace and positioning the nation on a path of sustained, people-centeredpoverty reduction, economic growth and sustainable human development. The strategy was jointly developed through a participatory process that involved consultations with stakeholdersthroughout the 15 counties of Liberia and thus reflectsthe desires of the people. My government has pledged and is committed to governing differently, decisively breaking from the past to deliver on its promise of significantly reduced poverty in Liberia. Intrinsically, Liberia is not a poor country, but rather is a country that has been managed poorly over the years. My government intends to capitalize on the nation's inherent strengths, specifically natural wealth and human resources, to the benefit all people without discrimination and in an equitable manner. Only by doing this can we deepen democracy and ensure peace and prosperityfor each Liberian. However, these endeavors cannot fall solely on the shoulders of the government. They have to be a collective effort of all Liberians, our international partners, civil society and the private sector. Each'has a major role t o play. With such collective efforts, I expect significant progress over the Interim Poverty Reduction Strategy period towards achieving our vision of consolidating peace, enhancing justice, deepening democracy, promoting human development and irreversibly setting Liberia on the path towards long-term growth and development. EllenJohnson Sirleaf President Republic of Liberia PREFACE This Interim Poverty Reduction Strategy (IPRS) is a national strategy endorsed by the Government of Liberia focused specifically on poverty reduction. The Liberian iPRS will guide the development management process for the period spanning July 2006 through June 2008. In formulating the iPRS, the government is showing its commitment and determination in addressing poverty by using creative strategies and innovative programs. As outlined in the iPRS, the government has prioritized key development issues into four pillars under the Liberia Reconstruction and Development Committee (LRDC): 1) enhancing national security, 2) revitalizing economic growth, 3) strengthening governance and the rule of law and, 4) rehabilitating infrastructure and delivering basic services. The pillars provide key areas for strategic intervention in order to address the poverty challenge in all its dimensions, including income and non-income poverty. A lack of up-to-date information and statistics on current socio-economic conditions was the main limitation in preparing the iPRS. Efforts have begun to address the information gaps through extensive data gathering programs with the support of our development partners. The outputs of the data gathering exercises, in addition to a more elaborate and deepened participatory process, will inform the preparation of the full Poverty Reduction Strategy (PRS). Work on the PRS will begin in earnest and is expected to take about 18 months. Preparing the iPRS has been a challenging exercise and involved the participation of numerous people who are actively involved in civil society and the private sector. Additionally, donor partners made contributions to the process through a technical committee in charge of drafting of the iPRS. On behalf of the government, I extend thanks to the people of Liberia for taking time to participate in the consultations, our donor partners for their engagement and support and my colleagues in the administration and on various committees and working groups for their steadfast commitment throughout the process. Toga Gayewea McIntosh Minister of Planning and Economic Affairs Republic of Liberia Foreword ii Preface iv ExecutiveSummary ix PART ONE 1 CONTEXT, FOUNDATIONAND FRAMEWORK Chapter 1 From Conflict to Development 1 Chapter 2 Breaking with the Past and New Beginnings 11 Chapter 3 The Interim Poverty Reduction Strategy Process and Transition 23 to Sustained Development PARTTWO 31 COMPONENTS OF THE STRATEGY Chapter 4 Pillar I:Enhancing National Security 31 Chapter 5 Pillar II: Revitalizing the Economy 37 Chapter 6 Pillar Ill: Strengthening Governanceand the Rule of Law 61 Chapter 7 Pillar IV: RehabilitatingInfrastructureand Delivering Basic Services 77 PARTTHREE 87 IMPLEMENTING THE STRATEGY AND FULL POVERTY REDUCTION STRATEGY PAPER ROAD MAP Chapter 8: Implementing the Strategy 87 Chapter 9: Indicative Road Map to the Full Poverty Reduction Strategy 93 Data and InformationSources D-I ANNEXES A I-1 Annex 1: Views from the Counties on the Poverty Reduction Strategy A1-1 Annex 2: Confronting the National Capacity Crisis A2-1 ACRONYMS AND ABBREVIATIONS AFL Armed Forces of Liberia AGOA African Growth and Opportunity Act AlTB Agricultural and IndustrialTraining Board ARI Acute Respiratory Infection BIN Bureau of Immigration and Naturalization BIVAC Bureau of Inspection Valuation Assessment and Control BMA Bureau of Maritime Affairs BPS Bank Payment Slip CBL Central Bank of Liberia CCT Center for Conflict Transformation (University of Liberia) CFSNS Comprehensive Food Security and Nutrition Survey CMC Cash Management Committee CPI Consumer Price Index CRC Convention on the Rights of the Child CRS Catholic Relief Services CSA Civil Service Agency cso Civil Society Organization DflD Department for International Development (United Kingdom) DHS Demographic Health Survey ECOWAS Economic Community of West African States EIA Environmental Impact Assessment EPA EnvironmentalProtectionAgency FACPEL Free and Compulsory Primary Educationfor Liberia FA0 Food and Agriculture Organizationof the United Nations FDA Forestry Development Authority FLY Federation of Liberian Youth FRMC Forestry Reform Monitoring Committee GBV Gender-Based Violence GDP Gross Domestic Product GEMAP Governance and Economic Management Assistance Program GOL Government of Liberia GPA Global Plan of Action GRC Governance Reform Commission GSA General Services Agency GSM Global System for Mobile Communication GSS Global Security Seals GTZ Deutsche Gesellschaft fur Technische Zusammenarbeit HIC Humanitarian Information Center for Liberia HlPC Highly Indebted Poor Country HIV/AIDS Human Immune VirudAcquired Immune Deficiency Syndrome IDP Internally Displaced Person IGPC Inter-Governmental Philatelic Corporation ILO International Labor Organization IMF International Monetary Fund IOM International Organizationfor Migration iPRS Interim Poverty Reduction Strategy iPRSP Interim Poverty Reduction Strategy Paper JNA Joint Needs Assessment LACE Liberia Agency for Community Empowerment LBS Liberian BroadcastingSystem LCAA Liberia Civil Aviation Authority LDHS Liberia Demographic and Health Survey LEAP Liberian Employment Action Program LEEP Liberian Emergency Employment Program LFI Liberia Forest Initiative LHDR Liberia Human Development Report LINNK Liberia Non-Governmental Organization Network LIPA Liberia Institutefor Public Administration LlSGlS Liberian Institutefor Statistics and Geo-InformationSystems LMA Liberia Marketing Association LNP Liberian National Police LPRC Liberia Petroleum Refining Corporation LRDC Liberian Reconstruction and Development Committee LRRRC Liberian RefugeeRepatriationand Resettlement Commission LW&SC Liberia Water and Sewer Corporation MCC Monrovia City Corporation MDG Millennium Development Goal MEG Mechanical Engineering Group MFA Ministry of Foreign Affairs MIA Ministry of InternalAffairs MIC&T Ministry of Information, Culture and Tourism MOA Ministry of Agriculture MoC&I Ministry of Commerce and Industry MOD Ministry of Defense MoE Ministry of Education MoF Ministry of Finance MoG&D Ministry of Gender and Development MoH&SW Ministry of Health and Social Welfare MOL Ministry of Labor MoLM&E Ministry of Lands, Mines and Energy MoS Ministry of State MOT Ministry of Transport MoY&S Ministry of Youth and Sports MPEA Ministry of Planning and Economic Affairs MPT Ministry of Post and Telecommunication MPW Ministry of Public Works MRD Ministry of Rural Development NAC National AIDS Commission NACP National AIDS Control Program NCDRR National Commission for Demobilization, Reinsertion and Reintegration NER Net Primary Enrolment Ratio NGO Non-Governmental Organization NHA National Housing Authority NPA National Port Authority NRC National ReconciliationCouncil NSA National Security Agency NTGL National Transitional Government of Liberia OPlC Overseas Private Investment Corporation os1 Open Society Institute PAPU PanAfrican Postal Union PPC Poverty Reduction Strategy Preparatory Committee PPCA Public Procurement and ConcessionsAct PPCC Public Procurement and Concessions Commission PPP Purchasing Power Parity PRS Poverty Reduction Strategy PRSP Poverty Reduction Strategy Paper PUL Press Union of Liberia QWlC Quick Welfare, Income and Consumption survey RFlR Roberts Flight Information Region RFTF Results Focused Transitional Framework RIA RobertsfieldInternationalAirport RMU Resource Management Unit SEA Sexual Exploitationand Abuse SES Senior Executive Service SETS Socio-economicTransformation Strategy SMP Staff Monitoring Program SOE State Owned Enterprise sss Special Security Service STD Sexually Transmitted Diseases TRC Truth and ReconciliationCommission TST Technical Support Team UNCT United Nations Country Team UNDP United Nations Development Program UNEP United Nations Environment Program UNESCO United Nations Educational, Scientific and Cultural Organization UNFPA United Nations Population Fund UN-HABITAT United Nations Human Settlement Program UNHCHR United Nations High Commissioner for Human Rights UNHCR United Nations High Commissioner for Refugees UNICEF United Nations Children's Fund UNIFEM United Nations Development Fundfor Women UNMIL United Nations Mission in Liberia UNOPS United Nations Office for Project Services UPU Universal Postal Union USD United States Dollar WFP World Food Program WHO World Health Organization WONGOSOL Women's NGO Secretariat EXECUTIVE SUMMARY Introduction This Interim Poverty Reduction Strategy (iPRS), the first t o be prepared for Liberia, sets out the emerging process and framework for recovery and reconstruction in the context of post-conflict Liberia. It provides diagnostics of the issues and articulates priority interventions to be pursued by the Government of Liberia and other stakeholders over the period July 2006 through June 2008. It takes into account the Results Focused Transitional Framework (RFTF) developed during the previous National Transitional Government (NTGL) between 2003 and 2006, as well as the more recent 150-Day Action Plan of the current government. The iPRS represents a bridge to a full MDG-based Poverty Reduction Strategy (PRS)to be launched in July 2008. The iPRSP sets out the national socio-economic context, the preparatory process, dimensions of the emerging policy, capacity-building and program choices and priorities for poverty reduction and development, as well as anticipated implementation challenges. It also represents a further opportunity for deepening Liberia's development partnership, while at the same time responding more meaningfully and concretely to the 2005 Paris Declarationon Aid Effectiveness. The iPRSP is structured into three parts: Part 1 (chapters 1, 2 and 3) provides historical background to the conflict and the prevailing socio-economic context within which the nation's poverty-reducing strategy is being developed. It also presents key policy choices and directions, as well as elements of Liberia's national vision. Information on the process followed in preparing the iPRS, and the development planning and management framework to ensure a smooth transition to sustained development is also presented in Part 1, Part 2 (chapters 4, 5, 6 and 7) outlines key elements of the poverty reduction strategy for Liberia, centered around the four pillars prioritized by the Government of Liberia'. It also incorporates a number of cross-cutting considerations. Part 3 (chapters 8 and 9) addresses the challenges of implementing the strategy and concludes with an indicative 'road map' for developing the full Poverty Reduction Strategy Paper (PRSP). From Conflict to Development The origins of the Liberian conflict can, inter alia, be traced to the exclusion and marginalizationof significant portions of society from institutions of political governance and access to key economic assets, such as land. An over-concentration of power, closed political system that bred corruption and restricted access to decision making processes limited the space for civil society participation in governance and instead, fueled ethnic and class animosities and rivalries over time. This was compounded by a collapsing economy brought on by bad policies as well as declining commodity prices, which created ideal conditions for the crisis. The conflict itself quickened the pace of economic decline and today, the economy is estimated at about one eighth of what it was before the war. 1- The four pillars are (I1 Enhancing national security, ill1 Revitalizing the economy, (1111 Strsngthsning governance and the rule of law, and (IV1 Rehabilitating infrastructure and delivering basic services. Presently, unemployment inthe formal sector is as high as 80 per cent and unless this is reversed, the path t o peace will remain fragile. Most roads remain impassable, contributing significantly to weak economic activities and serious curtailment of peacebuilding efforts. It is with this perspective in mind that the Liberia iPRS has been designed. TheContext The destruction and long-term negative consequences of the conflict were enormous. An estimated 270,000 people died, hundreds of thousands became refugees and internally displaced and thousands of lives were shattered. National and civil institutions were completely destroyed: systems of checks and balances were dismantled; the rule of law virtually ignored; the media severely weakened; and corruption in all its forms and manifestations pervasive. Years of mismanagement left Liberia with a massive external debt burden, estimated at about 3.7 billion United States Dollars (USD) as of mid-2005 equivalent to 800 per cent of the Gross Domestic Product and 3,000 per cent of export earnings. Nearly three quarters of the population now live below the poverty line of 1 USD per day. The majority of Liberians, mainly youth, are either unemployed or employed in the informal sector as a result of shrinkage in the formal sector as well as the disastrous political, economic and social effects of the war and debilitating international sanctions on the export of diamonds and forest resources. These have had a detrimental impact on productive activities and the overall human development situation. Delivery of basic services such as health, education, food security and potable water is virtually inaccessible to most of the population; if not addressed, this can exacerbate destabilizing conditions. After many years of conflict, the Accra Comprehensive Peace Agreement of 18 August 2003 ushered in peace and the creation of a National Transitional Government. The transitional arrangement ended when successful democratic elections were held in October and November 2005. The nation's and Africa's first female President, Her Excellency Mrs. Ellen Johnson Sirleaf, was inaugurated on 16 January 2006, marking a new beginning for Liberia. The efforts of the government, the contributions from Liberia's development partners and the support of the Liberian people as they work hard work to try and rebuild their lives are starting to show visible results. But the challenges of significantly reducing poverty and achieving people-centered development in post-conflict Liberia remains daunting and will require continued and significant efforts going forward. Breaking with thePastandNew Beginnings Bearing in mind the fragile political, social and economic context, the successful national election was a clear signal from Liberians that they want a new start based on peace and security, economic opportunities for all, basic social services, respect for justice and human rights and good governance. It is imperative that the new administration recognizes its mandate t o definitively break with past policies and actions that created the Liberian crisis and start afresh. Inresponse to the expectations of the people, the government has laid out a broadvision for a new Liberia. Consolidating peace, enhancing justice, deepening democracy, ensuring food security, promoting human development and setting the nation on the path for long- term growth and development represent the core elements of this vision. The new Liberia will aim t o do away with the divisions, marginalization and exclusions of the past. Inclusiveness and empowerment of Liberians through effective decentralization, accountability, transparency and participatory engagement in governance will be national goals. To achieve this, the government strongly desires to work with all stakeholders to strengthen participatory democracy and firmly entrench democratic culture in Liberia. This will require human and institutional capacity-building, embedding proper checks and balances among the three arms of government and strengthening the media and civil society to play an independent and constructive role in national development. There is also the immediate need to build a strong economy with job opportunities, led by a robust recovery of the private sector, particularly in agriculture, mining, minerals, forestry and the rubber industry. Furthermore, t o make the new vision a reality and avoid a recurrence of conflict, steps must be taken t o create institutions that will address civil war-related legacies and enhance effective governance in a post-conflict setting. The medium term approach will encompass the promotion of public accountability and transparency, combating corruption, empowering local authorities and promoting human rights as part of governing differently. A key example of the commitment to change is the ongoing Governance and Economic Management Accountability Program (GEMAP), which is strongly supported by Liberia's development partners. Continued support for this program and the Staff Monitored Program ISMP) with the International Monetary Fund (IMF) affirms the sustained commitment of the new government t o budgetary balance and to an improved macroeconomic framework. However, these will be coupled with national efforts to address the root causes of poverty such as exclusion, marginalization, denial of basic rights and centralization of power, in order t o ensure sustained growth, development and significant reductionin poverty levels. Policy ChoicesandDirection Policy choices available to the government are clear. The government is committed t o consolidating peace by strengthening key institutions for national security and completing the process of demilitarization, demobilization, rehabilitation and reintegration. These are key priorities. The government is also committed to reforming the public sector and bolstering public service delivery at all levels in addition to improving management and effectiveness of human and financial resources. By engaging in strategic international partnerships with an aim to improving effectiveness, the government has made deliberate decisions to put in place mechanisms that ensure mutual respect, transparency, accountability and better coordination and monitoring of aid. The Interim Poverty Reduction Strategy Process and Transition to Sustained Development The Liberia Reconstruction and Development Committee (LRDC)was established by the government in March 2006 as the country's chief development coordination body. It has provided overall policy guidance and necessary political will to govern the iPRS preparation and drafting processes, while the Cabinet of the Government of Liberia took responsibility for the final endorsement and ownership. Working under the LRDC and cabinet, a Poverty Reduction Strategy Preparatory Committee (PPC) was established to assure quality, policy coherence and strategic coordination. A technical support team, made up of the United Nations Development Program and the World Bank, was also established to provide dedicated technical insight and advice t o the preparatory committee. Views and inputs were solicited from all counties, parliamentary committees, political parties, line ministries, superintendents and development superintendents, academia, civil society organizations, tribal leaders, donors, non-governmental organizations and grassroots organizations through several consultative and working sessions in Monrovia and the counties. Common concerns were raised during the consultations; differences of view emerged as well, depending upon individual circumstances, geographic location and interest. On the whole, a number of poverty-reduction policy inferences drawn from the suggestions underscore the capacity-building imperative, particularly: the need to secure the burgeoning peace; improving social service delivery; deepening participation of the people in development processes; cultivating a robust private sector; and ensuring a sound macroeconomic policy environment. The iPRS builds on the progress made by the government during its first 150 days, providing a logical bridge between its 150-Day Action Plan and the full, four-year, MDG- based PRSP to cover the period 2008-2012. The strategy will be situated within a framework of a national longer-term vision currently under development by the Governance Reform Commission and the Ministry of Planning and Economic Affairs. Further diagnostic work will be necessary in preparing the full PRS, which itself is a key element in permitting Liberia to secure debt relief through the Highly Indebted Poor Country process. Componentsof the Interim Poverty Reduction Strategy The iPRS is centered on the early, but durable, consolidation of the national peace to better position the nation for sustained poverty reducing economic growth and development. Inthe words of Her ExcellencyPresident Ellen Johnson Sirleaf: "Our (national) strategy is to achieve ...visibleprogressthat reaches significant number of our people ... consolidatesupport and establish the foundation for sustainedeconomic development." (Inaugural Address, January 16,2006). In this context, components of the strategy are clustered under four broad pillars. The challenges under each pillar are huge, but some initial steps t o tackle them have been taken with modest success since the government assumed power. General issues and the medium term agenda are highlighted under each of the pillars below. Pillar 1: Enhancing National Security In the past, security forces became a tool for repression and impunity that accentuated the total collapse of state apparatus. Among the problems were a lack of professionalism, absence of democratic control, lack of accountability t o the rule of law, weak oversight, and inadequateresources. The armed forces, police force, and all other security forces need to be completely rebuilt following the devastation of the civil war. This is also a task contained inthe comprehensive peace accord. The short- to medium-term agenda is to develop a national security strategy to guide security sector reform and to extend national security actions. The government is determined t o ensure that the current peace is maintained and built upon. Among the actions planned over the iPRS period is a national security assessment, formulation of national security strategy and rebuilding of the Liberian security forces with a recruitment of 5,500 military and security personnel (including police), with at least about 20 per cent composed of females. Extensive training already under way will be continued for the sector and an early warning system will also be established to prevent conflicts. These programs will be combined with efforts to provide jobs for youth and ex-combatants and programs t o reintegrate and resettle former internally displaced persons and returned refugees. Pillar 2: Revitalizing theEconomy The economy of Liberia is a shell of its past. Gross Domestic Product is currently one eighth of 1980s pre-war levels, as productive sectors such as agriculture and forestry, mining, manufacturing and construction collapsed, along with social and economic infrastructure in the war years. Major macroeconomic imbalances emerged, including both external and domestic debt overhang, with a debt/export ratio now exceeding 3,000 per cent. Economic management capacity weakened dramatically, infrastructure collapsed and the economy became dominated by a large informal sector characterized by low productivity and lack of innovation. According t o one estimate, unemployment in the formal sector stands at a staggering 80 per cent. High unemployment, primarily among youth, undermines poverty reduction and significantly contributes to security concerns. The challenge ahead is how t o resuscitatethe economy, create significant job prospects that could make an impact quickly, rebuild infrastructure and the various economic sectors (agriculture, fisheries, mining, forestry, wood processing and manufacturing) and accelerate the pace of economic growth as the foundation for poverty reduction and sustained development. Achieving these objectives will require implementation of a robust economic policy with a strong emphasis on a stable macroeconomic environment, a monetary and exchange rate policy to ensure price stability and a prudent fiscal policy. Other policy goals include improving the management of state enterprises, revitalizing agriculture, reviving mining and forestry and improving the management and use of natural resources. Furthermore, governmental strategy will focus on enabling the recovery and development of the private sector through several policy measures including: facilitating support in the informal sector; improving energy supply and stability; providing access to finance; reforming land ownership and tenure systems; loweringlrationalizing the corporate tax rate; reforming the investment code; modernizing laws and regulations for the telecommunication sector; and reforming and reducing administrative and regulatory practices and proceduresthat hinder economic activities and investments. A key measure will be support to the informal sector, now a dominant part of the economy and where a majority of women and the poor earn their livelihoods. Support in the form of productivity-enhancing training, skills upgrading and programs to facilitate increased access to credit for the sector will be undertaken. The objective is t o enhance the productivity of the poor and raise their incomes. These efforts will be implemented in an environment that favors the market and provides a leading role for the private sector in the economy. Inthe short to medium term, the focus is on significant job creation and employment. Pillar 3: Strengthening Governanceand the Rule of Law Bad governance can be blamed for most of the crises that besieged Liberia over the past quarter of a century. Violence, human rights abuses, arbitrary killings, enforced disappearances, torture, use of children by fighting forces, targeting of civilians, rape and sexual violence against women and children were commonplace and leave a legacy that must still be overcome. This means a number of challenges must be faced in the immediate iPRS period and beyond. Key to tackling these is working to change the mindsets and value systems of Liberians and restructuring and strengthening central and local governance institutions, systems and processes as well as ensuringthat rule of law prevails. The government has made significant progress in redefining the mandates of public institutions, developing a comprehensive anti-corruption strategy, proposing a successor to the Governance Reform Commission, establishing the Truth and Reconciliation Commission and the Independent National Commission for Human Rights, reforming the Civil Service Commission, and initiating discussions on the relationship between the central and local government. The result is that hope is being restored, corruption has been reduced and transparency and accountability has increased. However, a lot more remainsto be done. The short t o medium term agenda of the government is to lay the foundation for a new democratic culture, achieve balanced development and promote a culture of accountability in order to meet the collective aspirations of the people. A t the cornerstone of the national agenda are respect for the rule of law in all spheres of national life, provision of equal opportunities and better management of the economy and national resources for the benefit of all. More specifically the government, in collaboration with civil society, will focus on: reforming and rebuilding the public sector; decentralizing political governance and social responsibilities; strengthening the rule of law and respecting human rights; conflict-sensitive policy making and conflict management mechanisms; affirmatively addressing gender inequalities; strengthening environmental rules and regulations; rebuilding civil society and the media; involving broader participation inthe governance process; and reducing corruption. Pillar4: RehabilitatingInfrastructureandDelivering Basic Services A critical challenge facing Liberian society is rebuilding infrastructure roads, telecommunication lines, water and sanitation, schools and health care facilities that were totally destroyed as a result of war and years of neglect. A major focus of the government since assuming power has been on rehabilitating infrastructure and delivering basic services t o the public and private sectors in order to create the necessary conditions t o achieve broad-based growth and poverty reduction. The government has launched various programs to facilitate infrastructure rehabilitation and the delivery of basic services. These include the rehabilitation of several hundred kilometers of roads and a few bridges, rehabilitating schools, clinics and community health facilities, financing community projects, beginning to rebuildthe electricity grid, revitalizing the national strategy t o fight HIV/AIDS and the fight against malaria and tuberculosis, rehabilitating water pipelines in certain parts of Monrovia, initiating the process of school curriculum review, drafting a new national youth policy, launching a new girl's education policy and increasing budgetary allocation for health and education. Over the short to medium term, the government will continue to focus strongly on fundamental national infrastructure to ensure telecommunications, transport, electricity, water and sanitation, education and health and nutrition for all. Thus far, visible progress has been made, but given the nature of the challenge there is still much to do. Without adequate infrastructure, the ability of Liberia to reduce poverty in any significant way will be severely hindered, thereby increasing the likelihood of a return to conflict. Additionally, the reconstruction of infrastructure has the potential t o provide thousands of jobs for youth and the unemployed. The substantial multiplier effects of a massive infrastructure reconstruction program on the economy and poverty reduction will facilitate the delivery of basic services, including health and education. The government is committed to rebuilding infrastructure in collaboration with county governments and communities. The plan involves working closely with the international community, while also securing private sector participation in the rebuilding efforts. Engagement of the youth and the community inthe revitalizationof infrastructure and basic services is a key element of the agenda of the government. Implementingthe Strategy Successful implementation of the iPRS depends on a number of factors. Foremost amongst them are the foLlowing: Manifesting strong political will: The government has demonstrated this at the highest leadership levels, as demonstrated in the initial 10 months of its program implementation, which has included an aggressive fight against corruption and mismanagement of public resources. The government intends to continue building on this strength during the iPRS period and beyond. Building constructive partnerships: Both domestic and external partners will be engaged. At the national level, the ultimate goal of the government is not simply to solicit inputs in the development of policies, strategies and programs but also engage civil society and youth groups, the business community and women in the informal sector to obtain their engagement in the implementation of the poverty reduction strategy. At the international level, the government will continue to place an emphasis on improving donor support, coordination and harmonization. An effective development assistance database will be created as a first step for the establishment of a platform and mechanism for better coordination, harmonization and effectiveness of donor support in Liberia under the leadership of the government. Ensuring effective mobilization and utilization of resources: Mobilizing more resources from within is a key element of the government's strategy. This includes more effective management of public resources and stimulating the private sector to generate additional resources for development. Putting in place a sound macroeconomic policy environment and addressing critical infrastructure constraints and structural policy weaknesses will be critical in that regard. Attracting investors will require a focus on local investors, Liberians inthe diaspora and foreign direct investment. Monitoring and evaluating the strategy implementation process: A participatory mechanism will be established to monitor implementation, evaluate progress and measure the impact of the strategy. Each agency charged with the responsibility of executing one or more of the interventions shall report quarterly to the LRDC using an activity tracking questionnaire. Managing potential risks: Ensuring implementation risks are identified and measures taken t o minimize them are fundamental considerations. Possible risks include shortfalls in financing, re-emergence of conflict and limited leadership and administrative capacity. The public sector financial situation is precarious and presently supports only recurrent expenditures almost exclusively. There is virtually no development spending. Although the national development partnership is strong, there is as yet no partner commitment to budgetary support. Even though a strong cabinet and national leadership team is currently in place, capacity at levels below Deputy Minister and Assistant Minister are extremely low (even by normal post-conflict country standards). These risks are real, but they are unlikely to derail the level of commitment the government has attached to achieving the goals of reducing poverty in Liberia in its medium to longer term development agenda. Towards the FullPoverty Reduction Strategy In relation to the full PRS that will follow in about 18 months, much more information at the macroeconomic, sectoral and structural levels must be known. This will provide a full understanding of the challenges confronting the Liberian government and people as well as help to put credible, affordable, poverty-reducing responses and programs in place over the next three to five years. This is a sine qua non for robust, long term shared economic growth and transformation beyond the first PRS period of 2008-201 2. More diagnostic work, more data collection and more analysis is required in virtually every sectoral or thematic area. Additionally, participation in the full process will also need to be deepened to ensure ownership and buy-in by the people. Consultations will be organized throughout the country and within communities. However, to successfully complete the full PRS, significant support is required from Liberia's development partners, both in material and financial terms. PART ONE CONTEXT, FOUNDATION, AND FRAMEWORK CHAPTER ONE From Conflictto Development "Failure to do thenation's business differently willslip the country andits people back into conflictand deeperpoverty"2 1.I Introduction This chapter presents the overall policy context of the Liberia Interim Poverty Reduction Strategy (iPRS). The case for a conflict-sensitive, anti-poverty strategy is made, beginning with the root causes of the Liberian conflict and the relationship between conflict, poverty and human rights. The chapter also provides background information and underpinnings of the emerging strategic agenda, policy choices and specific interventions the government will be implementing over the iPRS period while it continues to work with other stakeholders to develop a full poverty reduction strategy. A case for a structural change is also made, while highlighting ongoing plans to break with the past in order to consolidate peace, enhance security and substantially reduce poverty. 1.2 Originsof the Conflict The origins of the Liberian conflict can be traced to t w o broad factors. Marginalization Significant portions of society were systematically excluded and marginalized from institutions of political governance and access to key economic assets. For example, the founding constitution was, arguably, designed for the needs of the settler population with less consideration and involvement of indigenous people. Political power was concentrated essentially in Monrovia and primarily at the presidency. This political system bred corruption, restricted access to the decision making process, limited civil society participation in governance and fueled ethnic and class divisions and hatred. Early-established land and property rights for the majority of Liberians were severely limited. Marginalization was perpetuated by urban-biased policies of successive administrations and most infrastructure and basic services were concentrated in Monrovia and a few other cities. Marginalizationof youth and women, mismanagement of national resources and inequalities in the distribution of benefits were significant problems. The consequence was high levels of resentment towards the ruling elite, which led in part to a bloody military coup in 1980 with initial support coming from the majority of people. Unfortunately, the military and successivegovernments failed to correct social ills and in many cases simply exacerbatedthe problems. Economic Collapse Liberia's economy posted steady economic growth averaging 4 to 7 per cent, per year through the 196Os, largely a result of the 1944 Open Door Policy and Unification Program introduced by President William Tubman. A t the core of these policies were the 2 . Toga Gayewea McIntosh granting of major concessions to foreign interests t o exploit reserves of iron ore, harvest timber and expand rubber plantations, the latter of which was pioneered by the Firestone Tire and Rubber Company. Thanks t o the high prices of iron ore and rubber on world markets, Liberia witnessed a periodof economic boom. Over time however, the economy could not sustain its impressive record. Prices of primary goods fell, which together with a decline in capital investment precipitated a sharp decline of the economy. Gross Domestic Product (GDP)growth rate fell from 5 per cent inthe early 1970s t o less than 1 per cent in mid-1980s. This was compounded by an increase in inflation and soaring unemployment3. Liberia's external debt burden rose from 750 million United States Dollars (USD) in 1979 to 1.4 billion USD in 1985. Official development assistance plummeted from 131 million USD in 1985t o 7 5 million USD in 1988. Traditional systems of governance broke down: the economy crashed; local currency depreciated significantly, from parity with the USD to over 6 0 Liberian Dollars to 1 USD; illicit trade in diamonds and timber flourished; and a massive exodus of skilled and talented people from the country took place. The economic hardship created an active setting t o enlist young people in rebel groups and, as conflict took hold, commercial and productive activities ceased as various warlords looted and vandalized the country's resources. All of this contributed to a precipitous economic decline and with it, the spread and deepening of national poverty. 1.3The Current EconomicContext Today, Liberia a nation that had achieved middle income status in the 1970s and was food secure - is a shell of its past. In 2005 prices, GDP per capita declined from 1,269 USD in 1980 to 163 USD in 2005 - an 87 per cent decline. Exports of about 486 million USD in 1978 declined to about 10.3 million USD in 2004. Throughout the 1980s and 199Os, the decline was consistent across the board: agricultural production dropped precipitously as people fled their farms and supporting infrastructure collapsed; mining and timber activity essentially ceased; rubber plantations closed; manufacturing dropped sharply; and the service industry ground to a halt. The economy only began to stabilize and rebound in 2004, with growth of 5.3 per cent experienced in 2005 and an expected 7-8 per cent growth for 2006. Public spending is not an engine of growth. Total government expenditure, including grants, has not exceeded 85 million USD since 2000, translating into per capita spending of about 25 USD, one of the lowest in the world. The 2006-2007 budget is projected at 130 million USD, a 60 per cent increase over the previous year, with at least 15 per cent devoted to pro- poor targeted activities. Inflation, which jumped to 15 per cent in 2003, subsequently subsided t o around 6 per cent, although there are new pressures from rising prices as the economy rebounds. Years of mismanagement have left Liberia with a huge external debt burden, estimated at about 3.7 billion USD as of mid-2005, equivalent to an astonishing 800 per cent of GDP and 3,000 per cent of exports. Domestic debt and non-salary arrears are estimated at about 700 million USD, a significant part of which is owed t o the banking system (includingthe Central Bank of Liberia). The decimation of the economy has led to very high levels of unemployment and ex- combatants, returning refugees and internally displaced persons (IDPs) are struggling to 3 .Amos Sawyer 11992). The Emergence of Aurocroacy in Liberia: Tragedy end Challenge. ICs Press, San Francisco. California find work. Formal sector employment is currently estimated at about 120,000, with some 50,000 to 60,000 employees in the public sector following recent efforts by Government to remove ghost workers from public payroll and reform the civil service. The majority of the population works in agriculture (subsistence farming), the informal economy (trading) and petty production. Other coping mechanisms include significant reliance on external remittances from relatives abroad and spin offs from donor-funded investments, especially in rural communities. Almost without exception, Liberians are far worse off today than they were 25 years ago. Figurel.l: The evolution of per capita GDPover time 1000 900 800 700 600 500 400 300 200 100 0 Note: GDP per capita data is based on World Bank, WDI 2004 series; GDP is measured in constant 1995 USD. 1.4 Characteristics of Poverty: Income Dimensions A critical challenge facing Liberian policy makers is the absence of up-to-date nationwide information and data on population and poverty. What is the population size? How is it distributed by sex, age and socio-economic characteristics? Who is poor? Where are they? Why are they poor?What are their coping mechanisms? The last population and housing census was conducted in 1984. The last comprehensive poverty profile of Liberia, undertaken by the United Nations Development program (UNDP) in 2001,4 indicated that 8 0 per cent of all households in Liberia suffer from income poverty. While data constraints make it difficult t o fully quantify the problems, the impact is felt in both rural and urban areas and across genders and ages as described below: 4 . See UNDP 12001 and 20061. and United Nations Joint Assessment (20041. Following international convention, the study defined the poverly line as rhos8 livingbelow 1 USD par day. per personand absolute poverty lineas 0.50 USD per day, per personbasedon 1985 purchasingpower parity. RuralPoverty: At least 56 per cent of the population lives in rural areas and over 80 per cent of those are subsistence farmers with little or no cash income. According t o the 2001 UNDP Liberia poverty profile, 86 per cent of rural households are estimated t o be poor and 64 per cent live in severe poverty. UrbanPoverty: Intowns that used to be prosperous from mining and rubber concessions of the past, 85 per cent of households are poor and 60 per cent are living in severe poverty today. In county headquarters, which receivedthe bulk of internally displaced people during the war, 75 per cent of households are poor, while 40 per cent live in extreme poverty. In Monrovia, about 50 per cent still fall below the poverty line while 22 per cent live in severe poverty. GenderDisparities: Beyond the rural-urban dichotomy, there is also a gender gap in poverty. Women are particularly vulnerable as a result of exclusion, marginalization and gender- based violence. Men, women, boys, girls, youth, elderly and female-headed, child-headed and male-headed households experience poverty differently, have different and varied opportunities, capacities and resources to cope with, reduce poverty and/or create wealth. The 2001 UNDP poverty profile indicatesthat 78 per cent of male-headed households live in poverty (55 per cent in severe poverty) compared to 69 per cent of female-headed households living in poverty (42 per cent in severe poverty). This available research is limited to male- and female-headed households and does not take into account the gender dimension for every grouping in all areas and at all levels. It is also important to note that these income poverty statistics do not include the non-income aspects of poverty and the special vulnerability of children and women in an environment of lawlessness and war, especially the high likelihood of exploitation and violation of their human rights. 1.5 Characteristicsof Poverty: Non-IncomeDimensions 1.5.1 Food Insecurity Food insecurity is a challenge in the current post-war Liberia with critical implications for peace and security, economic revitalization and poverty reduction. Estimates indicate that Liberia loses at least 1.2 per cent of GDP annually due t o vitamin micronutrient deficiencies. A joint Food and Agriculture Organization (FAO)/WorldFood program (WFP) Crop and Food Security Assessment carried out in January/February 2006 found four major causes of food insecurity in Liberia: agricultural production constraints; poor infrastructure and limited access to markets; poor biological utilization of food due to lack of access to health services, safe water and sanitation facilities; and lack of household labor and social support caused by a general disruption of traditional social networks during the war. In March/April 2006, the Government of Liberia carried out a countrywide Comprehensive Food Security and Nutrition Survey (CFSNS),which found that: a 11 per cent of the rurakemi-urban population are completely food insecure with a maximum of 28 per cent in the area that was mostly affected by the war and displacements; a 40 per cent are highly vulnerable and 41 per cent are moderately vulnerable to food insecurity. Only 9 per cent are completely food secure dropping t o almost 0 per cent in five counties; 0 All 15 counties have high to extremely high chronic malnutrition rates. Of children below five years old, 39 per cent are stunted, about 27 per cent are underweight and 7 per cent are wasted, though in some areas this is over 10 per cent or what is considered to be 'emergency' level. In Liberia, 14 per cent of all women have a low body mass index. 1.5.2 Weak Infrastructure Schools, hospitals and clinics - virtually all public infrastructure are severely damaged and in need of rehabilitation. Most government buildings are in shambles and there was no electricity or piped water in Liberia for 15 years until the new government turned some on in Monrovia inJuly 2006. Many roads are impassable, which seriously constrains peacebuilding efforts, hinders economic activity in agriculture, timber and mining and undermines basic health and education services. Expanding peace, revitalizing the economy and reducing poverty will be next to impossible without a significant improvement in roads. Electricity: It is estimated that less than 10 per cent of the current population of Monrovia has access to electricity; there is substantially less access outside the city. Where available, electricity is produced by privately owned generators resulting in limited availability and very high costs. Transport: Roads and bridges are severely damaged, with only about 700 kilometers of damaged paved road surface and 1600 kilometers of unpaved roads. Farmt o market access is difficult and parts of the country are isolated during the rainy season. Most of the railway network has not functioned for nearly 20 years. Civil aviation is limited to Monrovia with only United Nations flights operating upcountry. The port of Monrovia is the only operationalport in the country. Telecommunications: Virtually all the assets and equipment of the fixed line system operated by the Liberia Telecommunications Corporation were destroyed or stolen and service ceased completely in February 2005. Private sector investments in mobile telephone operations and Internet have helped meet the communications demand of both the public and private sectors. Housingand shelter: Liberia is experiencing substantial housing and shelter shortages. The war sparked massive internal displacements and rural-to-urban movements, with Monrovia hosting the majority of IDPs. There is a huge mismatch between the number of urban dwellers and available social services, leading t o overcrowding, deteriorating living conditions and the growth of slums and illegal home occupation. Shortage of suitable housing is a major constraint to getting professionals such as doctors, nurses and teachers into rural areas. Water supply andsanitation: Water, sewerage and treatment facilities are out of operation, except for a limited supply of water in parts of Monrovia. Garbage collection is minimal to non-existent. Recent estimates indicate that only 3 2 per cent of households have access to safe drinking water and only 2 4 per cent have access to sanitary facilities (CFSNS 2006). Many urban areas get by with well water. Fortunately no large scale waterborne diseases have been prevalent. 1.5.3 Poor State of Basic SocialServices Health: Only 41 per cent of Liberians have access to health care facilities. Of the 325 health facilities which existed before the war, about 95 per cent were partially or wholly destroyed. Only 10 per cent of communities surveyed reported having a health facility within the community (CFSNS 2006). There are only 43 Liberian physicigns and 21 nurse midwives t o cover public health needs. Liberia's health indicators are amongst the worst in the world. Infant and under-five mortality rates are 157 and 235 per 1,000 live births, respectively. Malaria remains the leading cause of child morbidity (42per cent), with diarrhoea accounting for 22 per cent and Acute Respiratory Infection (ARI)for 12 per cent. Maternal mortality rate was estimated at 578 per 100,000 live births (LDHS 2000) and the HIV/AIDS prevalence rate has risen to an estimated 5.2 per Education: Over half of Liberian children and youth are estimated to be out of school. The war destroyed about 70 per cent of existing school buildings and in the process, created a 5 Saa Liberia's GlobalFundpropo681, August 2006. - generation of people with very limited exposure t o formal education. Liberia is one of the few countries where the current generation has less educational attainment than the previous one. There is a substantial gender-differential and rural-urban gap in education. Illiteracy is estimated at 7 0 per cent nationally. In spite of the government's Free and Compulsory Primary Education (FACPEL) initiative, 'fees' are levied to partly provide for learning and teaching materials. Only 35 per cent of boys and 27 per cent of girls starting grade one reach grade five (Liberia Millennium Development Goals Report, 2004). The higher education system has remained paralyzed and the technical and vocational education and training system is still in disarray due to the looting of training equipment duringthe war. 1.5.4 PoorGovernance Almost all facets of governance in Liberia have suffered severely over the past t w o decades or more, essentially crippling national life and contributing greatly to deepening poverty. Weakened institutionsand human capacity: Liberia's once-considerable human capitaI and institutional capacity has been significantly eroded. No national institutions escaped the impact of war, including ministries, state agencies, the private sector and civil society organizations. The interruption of education essentially halted the process of new capacity formation, including civic leadership skills, which was further compounded by a lack of essential tools and logistics necessary for institutions to function. DevastatedStatisticalGeneratingCapacity:Before the war,the periodic production and dissemination of social and economic statistics was institutionalized within the Department of Statistics of the Ministry of Planning and Economic Affairs (MPEA). The war years essentially ended data collection and analysis which are pre-requisites for sound policy analysis and formulation, and it will take years to rebuild capacity. The Liberia Institute of Statistics and Geo-Information Services (LISGIS)is now charged with the responsibility for the collection and publication of official statistics under the Chairmanship of the Minister of Planning and EconomicAffairs. The lack of reliable data is one of the critical challenges faced by post-war Liberia. Hence, it is essential to achieve a National Statistical Development Strategy (NSDS) for Liberia as soon as possible. Today, there is very little data available in Liberia t o inform the drafting of the iPRSP. The population census is more than 20 years out of date, economic statistics are extremely limited and restricted to Monrovia. Routine data systems in service delivery Ministries and Agencies have collapsed. Health information exists for 1999/2000 from the Demographic and Health Survey (DHS) and more DHS data will be available in 2007 survey which is now ongoing. Data on poverty levels are not available. Some data exists from 2000 when a poverty profile was produced with UNDP support. A Core Welfare Indicator Questionnaire Survey (with a consumption module) is also planned, which will generate required information that are consistent with international standardsfor poverty measurement. Limited rights and access to informationhole,of media: Presently, Liberian media laws do not protect the independence of the country's media and require reform. Access to public information within public bodies is limited. The print media market in Liberia is plagued by a myriad of problems that undermine its capacity to contribute substantially to the reconstruction and democratization process in Liberia. Beyond Monrovia, access to media and information is very limited. The national broadcaster, the Liberia Broadcasting System (LBS), fell into disrepair and barely survives on meager resources. The LBS needs to be transformed into an independent public service broadcaster. Female media professionals constitute less than 20 per cent of the media population in the country. The t w o main training institutions the Mass Communication Department of the University of Liberia and Liberian Institute of Journalism are both in need of massive support. Despite the years of conflict and repression, the main association of media professionals in Liberia, the Press Union of Liberia, has managed to retain a relatively coherent and unified approachto addressing the challenges. Weakened civil society: Liberia has a long history of vibrant civil society groups, including tribal associations, sports groups, women's organizations, interregional development associations and community based associations.6 With the war, many of these initiatives gave way to better-financed non-governmental organizations (NGOs), which emerged to address problems. The result has been the monetization of civil society organizations. Their sustainability is doubtful, as demonstrated by the closure of several when donor funding dried up. Civil society organizations also face a lack of individual, institutional and societal capacity as well as a lack of operational funds, A 2004 United Nations Development Fund for Women (UNIFEM) capacity assessment of local women's NGOs and groups revealed serious gaps: many did not have a member or staff person with gender training, adequate skills in management, proposal writing or fund-raising and advocacy and they had limited access to funds for the necessary advocacy for gender justice. Significant policy gaps: Capacity for conducting quality diagnostics, identifying appropriate policy options and agreeing upon and complying with specific policy formulation has been severely lacking in almost all national institutions and agencies. This has contributed to excessive, hasty and poorly designed policies and laws, which is further compounded by limited (or total lack of) reliable data. In this regard, social sector policies in the areas of education, health, environment and governance have been particularly hard hit. 1.5.5 Relatively Weak Security Situation To feel safe and secure is a basic human right (Box 1.3). Like in any post-war situation, anxieties about personal safety in Liberia run high. The crime rate is increasing, easy access t o firearms is prevalent, there is widespread gender-based violence, particularly rape, and ex-combatants with no jobs and no proper mechanisms for reintegration into society are commonplace. With the breakdown of social capital, significant efforts in rebuilding will haveto take place around social norms and the criminaljustice system. 6- AmoaSawyer (19951.BeyondPlunder: TowardDemocratic GovernanceinLiberia. CHAPTER TWO Breakingwith the Past and New Beginnings After more than two decades of misrule, violence and economic collapse, the Liberian people are now taking the first steps on the long road to recovery and sustained economic development. 2.1 Introduction This chapter gives a glimpse into Liberia's new beginning by highlighting the initial progress made by the recently-elected government. It also provides key elements of the future vision, policy choices and overall direction in the efforts to build a more prosperousand promising Liberia. 2.2 A NewVision for the Future Government desires to build a new Liberian nation that is peaceful, secure and prosperous. This will require policies that resulting economic recovery and political stability that are mutually reinforcing. A strong economy with robust job growth is key. This is best done by restoring the traditional engines of the Liberian economy rubber, timber, mining and cash crops to full growth potential. The revitalisation of economic and social infrastructure is critical to the achievement of these goals, with the private sector playing an active role. Consolidating peace, enhancing justice, deepening democracy, ensuring food security, promoting human development and setting the nation on a path for long-term growth and development are the foundations of this vision. The agenda for the new Liberia is focused on empowering people by enlarging their choices, building a genuine democracy and entrenching a democratic culture in Liberia. Human development in the new Liberia necessarily includes total elimination of insecurity, the restoration of peace, reconciliation and protection of human rights. Additionally, it will require the building of a new security and police force sufficiently strong t o keep the peace while resting firmly under democratic civilian control. The new Liberia aims to do away with divisions, marginalizationand exclusion that were common in the past and, instead, replace them with inclusiveness and empowerment through decentralization and grassroots engagement in governance. Part of this vision entails a shift of power t o the counties and communities, so they will be empowered to effectively participate in decision making and take control of local issues and development processes. The goal is an inclusive and highly participatory democracy in which rights are respected; people are engaged in governance; national resources are used to benefit all people; and effective democratic institutions are built. This will require human and institutionalcapacity-building to ensure good governance and proper checks and balances among the three arms of government. Also significant is the need to give media and civil society space to develop and to be a force for national development. The future also requires a strong economy with robust job growth, led by a recovery in the private sector, particularly agriculture, mining, minerals and forestry (including rubber), stronger social services and infrastructure, renewed investment and increased trade with competitive Liberian firms exporting to the region and beyond. This encompasses building and empowering a new class of Liberian entrepreneurs. The national agenda is for an economy that is relatively open, with low tariffs and minimal government intervention, except where necessary to make markets work better. Preliminary efforts are already underway to articulate the shared national long term vision and formalize the framework to make that vision a reality. 2.3 Doing Government BusinessDifferently 2.3.1 Developinga Conflict-Sensitive Poverty ReductionStrategy In Liberia, it is essential for the government and society to respond appropriately to post- conflict challenges to avoid a recurrence of future conflict. Bearing this in mind, Liberia needs a conflict-sensitive development strategy so it can better anticipate the potential for events to exacerbate or create conflict and design development institutions that address the root structural causes of the conflict and contribute t o peacebuilding. (Box 2.1 1. 7- Data referenced in the Millennium Deveiopment Project ReponInvestingin Developmen?, 17 January 2005. The report identifies prominently recurringreasons that make poor countries morevulnerable to conflict as poorstate capacity. scarcity and inequality. and demography and socialstructvres lp.421. The government has resolved to avoid recreating pre-war Liberia, in either its governance or economic structures, and do business differently in order to move the country from conflict to peace and on to development. It is determined t o build a new economy with opportunities for all and not simply for the elite or a select few Liberians. Key efforts in this regard will include addressing the needs for national healing; reintegration and resettlement of refugees and internally displaced persons (IDPs); rebuilding social capital; reintegration of ex-combatants; and expanding employment and livelihoodsfor all (Box 2.2). Addressing the long tradition of centralization and misuse of power by the state, the dual and weak justice system, the social economic disparity based on identity and the lack of a shared national vision will also be critical. Past mistakes will be corrected through emphasis on separation of powers, decentralization and community empowerment, the transformation of legal structures to ensure a rights-based approach t o development and the supremacy of the rule of law. Policies that favor human development and create opportunities for all and the formulation of a national vision -one that is truly shared by the nation will also be pursued. Additionally, the government will be working with countries in the regionto deal with the regional dimensions of conflict. Since poverty is a by-product of the denial of human rights, pro-poor strategies must be implemented within a participatory, accountable and transparent framework. This means placing focus on individuals and groups that are socially excluded, marginalized, vulnerable and disadvantaged, including women, youth and the disabled. 2.3.2 Enhancing EffectiveGovernance ina Post-Conflict Setting Working alongside its partners, the Government of Liberia has already taken several key steps to create institutions that will address conflict-related legacies of the civil war. These steps are bolstered with associated policies and programs that are conflict-sensitive and that continue to address the underlying factors perpetuating both income and non-income poverty in Liberia. Amongst those efforts are: Public Accountability and Transparency: Ensuring accountability and transparency at all levels and enhancing public financial management are crucial steps in breaking with the past; the government has taken several key steps inthis area. Ithas begun to implement the partner-supported Governance and Economic Management Program (GEMAP) as a tool to strengthen public financial management, reduce corruption and build public sector management capacity in state-owned enterprises (Box 2.3). These efforts are yielding steady and positive results, although ensuring effective capacity-building for sustainability remains a challenge. The government has developed a new public Code of Conduct, by which political leaders and civil servants must abide. All public office holders must now publicly declare their assets. The president is leading by example, declaring all her personal assets. In support of transparency, the government will publish public resource flows and utilization on a quarterly basis and is setting up a way to monitor development progress by tracking the use and outcomes of public funding. The Public Procurement and Concessions Act (PPC) and the resultant Public Procurement and Concessions Commission (PPCC) are key elements in re-establishing good governance in Liberia. The PPCC is a vital institution working actively t o curb corrupt practices in the public and private sectors. Fighting Corruption: Corruption in Liberia has shown itself in practically all forms from bribery, embezzlement and fraud to blackmail, clientelism, nepotism and money laundering. Over the years, an expectation has emerged whereby any government official who fails to acquire wealth during his or her tenure is considered foolish. However, corruption has not been limitedto the public sector only; a substantial level of corruption exists in civil society. Many faith-based institutions, civil society organizations and community-based organizations are reported to be rife with misappropriation of funds, bribery, favoritism and other acts of corruption. Even the media and other watchdog agencies are reportedly engaged in these activities. Local and foreign private sector players are also seriously involved, constituting the single most important segment of the supply side of corruption in Liberia. Limited financial reporting, weak tax administration and other factors limit access to, and knowledge of, the scale of corruption in the private sector. In the past, few people who committed corrupt acts were punished. Instead, many seemed to have been rewarded with jobs, expanding their opportunities t o practice corruption. A founding principle of the government is zero tolerance for corruption. With the support of its partners, the government is putting in place systems and structures to control and monitor expenditures and accounts to ensure no slippages. Results so far have been positive revenues are up and slippages are down. The government is doubling its efforts by deploying new tools, such as the anti-corruption strategy (about to be enacted) and strengthening institutions such as the PPCC. A key part of the anti-corruption effort is stamping out the culture of impunity. Anyone engaged in corrupt practices will be prosecuted in the courts, subjected to the full weight of the law and, if found guilty, punished appropriately. Filling the Capacity Gap: The government has embarked on innovative transitional human resources measures to address immediate problems of capacity weakness and poor morale of the civil service and to support service delivery and advance wider reform efforts. A key example of this is the Liberia Emergency Capacity Building Fund, used by the government to bring back high-profile teams of Liberians, mostly from the Liberian diaspora. Some have been included in the government cabinet; people whose employment will reinvigorate the public sector, bringing new ideas, experiences and professionalism in support of the reform process. In the same vein, under the Transfer of Knowledge Through Expatriate Nationals (TOKTEN) program, the government is bringing back qualified expatriate Liberian professionals for short periods of time to contribute t o the reconstruction of Liberia. Using GEMAP, the government is taking full benefit of the presence of internationally recruited experts in order t o facilitate human and institutional capacity-building for economic management. Empowering f oca/ Governance: The government is clear on its commitment to decentralize decision making and resource allocation t o county and municipal governments. A key element of this is empowering and engaging communities, especially the poor and vulnerable within those, in the reconstruction process, in local governance and in addressing the root causes of conflict. This is seen as critical for rebuilding social institutions, community-level social capital (such as trust) and capacity for collaborative action. Additional efforts include: broad-based representation and participation in local development decision-making processes; participatory planning and implementation in local development; accountability in project management and implementation; and strong coordination with line ministries and local authorities. The aim is to build trust between the government and the governed; to ensure this and successful decentralization happens, emphasis will be placed on building county and local government capacity. Protecting Human Rights: Protecting and promoting human rights is integrally linked with pro-poor development and the consolidation of peace. Approaching poverty through the prism of human rights lifts it from the status of a social problem to a clear imperative. As a positive step, Liberia has ratified existing international human rights treaties, including the Covenant on Economic, Social and Cultural Rights, and as such the government shall ensure that every citizen enjoys social, civil, economic and cultural rights. 2.4 Policy Choicesand Directions Given the challenges facing Liberia, policy choices for the government are quite clear: prevent the nation from sliding back into conflict, build on the current peace to create an enabling environment for prosperity and forge strategic and constructive partnerships internally and with external partners t o build a desirable future for the people of Liberia. Broad national policy directions therefore are: Consolidating national peace by strengthening key institutions for national security and completing the process of demilitarization, demobilization, reinsertion and reintegration. Increasing investment in human capital and human development focusing on health, education and poverty reduction t o ensure that all citizens, without discrimination, are able to participate and make use of expanded opportunities for self-development. Ensuring a broad-based economic growth, by promoting the rehabilitation of the private sector, expanding trade and investment, rehabilitating forestry, rubber, coffee and oil palm and revitalizingthe mining sector. Ensuring food security by expanding food production and distribution, making food accessible and affordable and improving food absorption. Specific prioritiesfor the iPRS period (June 2006 June 2008) are presented in Box 2.4. 2.5 InitialProgress Implementation of the new government's cornerstone 150-Day Action Plan, introduced in January 2006 and covering the period ending June 2006, led to noticeable changes and achievements. Peace is in place, Liberians are beginning to feel optimistic about the future and the government is engaging with local stakeholdersand international partners to build a better society. The government acted immediately on its agenda of transparency and sound economic management on its first day in office. It cancelled all forest concession contracts, signaling a major break from the past. It enforced laws on tariff collection on the ports and revenues immediately shot up by 18 per cent over the previous year. It set out to begin providing electricity and water service and, in late July 2006, it restored power and water services t o parts of Monrovia for the first time in 15 years - a first step to re- establishing these services more widely. In September, the government passed the Forestry Reform Law of 2006. Several other early wins can be credited to the government: revising the civil service code; cleaning up procurement processes; introducing internal controls; overhauling financial management procedures; introducing measures aimed at fighting corruption in the public sector; creating employment opportunities for youth; and increasing financial support t o social sectors. Significant successes are also emerging from the government's resolve to restore civil authority, foster local level recovery, promote development by enhancing the capacity of counties and districts to exercise their mandate (thereby improve their planning capacities) and coordinating and deliveringessential services at the local level. Although more challenges remain (outlined in later chapters), Box 2.5 highlights some of the key achievements of the 150-Day Action Plan. A performance review of the 150-Day Action Plan suggests that good progress overall was achieved on most of the targets - about 70 percent of deliverables were completed, while about 28 per cent were initiated and are still ongoing, to be dovetailed into the Interim Poverty Reduction Strategy (iPRS). This is a very strong record for a new government in a difficult post-conflict setting. While the government is proud of its accomplishments, it is also mindful that it, along with its partners, fell short of implementing 100 per cent of the targets identified in the action plan. Factors limiting attainment of original targets seem to be related to governmental units, specifically: capacity constraints; slow draw downs of funding on account of a steep learning curve in new financial management and procurement procedures; over-ambitious initialtargeting; unforeseentasks that came up inthe course of the period; and less-than-expecteddisbursements by donor partners. There were also some methodological problems in the measurements, especially of the large volumes of qualitative tasks that were not fully appreciated at the outset. These lessons, internalized and discussed by the national cabinet and key partners, are being fully factored in the design of the benchmarks and targets for measuring iPRS interventions. CHAPTER THREE The Interim Poverty Reduction Strategy Process and the Transitionto Sustained Development 3.1 Introduction The design, formulation and drafting of the Interim Poverty Reduction Strategy (iPRS) comes as a result of a bottom-up consultative approach. The process has been inclusive and participatory, involving key sectors and stakeholders across a wide spectrum of Liberian society, right up to the national cabinet. Views and inputs were solicited from all counties, line ministries, superintendents and development superintendents, academia, civil society organizations (CSOs), tribal leaders, donors, non-governmental organizations (NGOs)and grassroots organizations. 3.2 Interim Poverty Reduction Strategy Preparatory Governance Framework An all-inclusive governance structure for preparing the iPRS was adopted (see figure 3.11. The framework has six main hierarchical but interactive components. At the apex is the cabinet, which took responsibility for the final endorsement and ownership on the part of the government. Below the cabinet sits the Liberia Reconstruction and Development Committee (LRDC), chaired by the president, which provides a donor- government partnership framework for coordinating the national reconstruction and development agenda. The LRDC provided overall policy guidance and assured the necessary political will in the preparation and drafting processes (see figure 3.2). The LRDC is also responsible for coordinating and monitoring the implementation of the iPRS. Figure3.1:Interim Poverty Reduction Strategy Paper Drafting Process The foundation has been laid for ensuring a more comprehensive participatory process for the full Poverty Reduction Strategy (PRS). A PRS Preparatory Committee (PPC) was established to assure the quality, policy coherence and strategic coordination of the process and strategy, chaired by the Minister of Planning and Economic Affairs. Members were drawn from the LRDC to act as pillar chairpersons, the legislature, CSOs, private sector organizations, youth and women's groups and other development partners to reflect and represent critical stakeholder interests. A Technical Support Team (TST)was established, chaired by the Deputy Minister of Planning and Economic Affairs and comprised of staff from the Office of the President, Ministry of Planning and Economic Affairs (MPEA), Ministry of Finance (MoF), Ministry of Agriculture (MOA), Liberian Institute for Statistics and Geo-Information Systems, the Central Bank of Liberia (CBL), the European Commission, the World Bank, the International Monetary Fund (IMF), the United Nations Mission in Liberia (UNMIL), the United Nations Development Program (UNDP) and CSO and NGO representatives. The TST provided technical support and advice to the PPC on progress of the Interim Poverty Reduction Strategy Paper (iPRSP)and UNDP and the World Bank provided dedicated technical support and advice. The pillar working committees were responsible for galvanizing inputs from sectors and cross-cutting groups and for conducting technical consultations. Each pillar working committee had to describe the existing post-conflict situation, reform problems and inherent structural weaknesses. Committees were also requested to propose strategies to deal with the problems. These inputs were expanded during stakeholder consultations and then passed to the TST. In each case, national actors drove sector-level work. Figure 3.2: The Liberia Reconstruction and Development Committee Organizational and Management Structure Revitalization &Basic Services Head: Defense Head: Plannin 3.3 The Participatory Process The process of participation and consultation, which began on 1 2 May 2006 and ended in November, provided important opportunities for Liberians t o contribute to the formulation, implementation and monitoring of a policy to reduce poverty. Specific objectives of the consultative process were to: Inform the population, donors and other key stakeholders of the process, their role in its formulation and consequently enhance their participation in the entire process; Generate information on the dimensions, coping mechanisms and trends of poverty; and Get first hand information on the impact of past and present government policies. Participatory discussions were conducted at all levels, involving administrative and technical persons, elected leaders, women and youth representatives, representatives of CSOs and NGOs, the private sector and the donor community. In all, 15 counties, county and development superintendents and tribal and clan chiefs conducted discussions to capture experiences, concerns, values and aspirations to help shape the strategic priorities of the iPRS. This built upon earlier, broad-based consultations led by the Governance Reform Commission (GRC) and in the preparation of the Results Focused Transitional Framework (RFTF).The following consultative sessions were held: A Partners' Retreat - held on 12 May 2006 in Monrovia, attended by key stakeholders, including the United Nations Country Team, the World Bank, CSOs, youth and women's groups, and the government. The session was chaired by the MPEA, with moderators drawn from civil society. Key decisions were taken on the framework of the iPRSP and the consultations strategy. A Civil Society Consultative Session - held on 2 0 May, attended by county superintendents, development superintendents, representatives from CSOs, NGOs, business groups, local associations, women's organizations and several cabinet ministers (Ministry of Internal Affairs, MPEA, Ministry of Gender and Development and Ministry of Information, Culture and Tourism). Heads of some state-owned enterprises and representativesfrom the donor community also participated. A TechnicaliPRSP Working Session - sponsored by the World Bank and facilitated by the government, this was conducted on 27 May in Monrovia. The workshop brought together technicians involved in the drafting process. The objective was t o do a sensitivity analysis on the content and data requirement for the strategy paper and learn from other experiences in the preparation and message of such papers. Resource persons from the government, the World Bank, the United Nations and other key donor partners participated inthe working session. Regionaland CountyLevel Consultations - held nationwide in 14 of 15 counties on 29 May under the leadership of the county superintendents. Consultations in the remaining county Grand Kru were held on 31 May. A Preparatory Committee WorkingSession - held on 5 July. Members of the Senate and House of Representatives Standing Committees on Planning and Economic Affairs attended the session, along with heads of development partner agencies, CSOs, NGOs and institutions of higher learning. The meeting provided an opportunity for PPC members and other guests to review and provide comments on the initial draft of the strategy. A Partners'Meeting held on 12and 13July, attended by major donors, cabinet members, - legislators, CSOs and United Nations agencies. The iPRSP was presented and additional comments and suggestions were received, which helped improve the substance of the document. Particular emphasis was placed on policy coherence and specificity of planned interventions. First WorkingSession of Cabinet was held on 14 July focusing on the needto ensure that - sector and pillar priorities were realistic and consistent with the 2006-2007 priorities and fully reflected in the policy matrix. This was followed by periodic cabinet briefings, discussions and a final endorsement in late October. WorkingSession with PoliticalParties - organized on the draft iPRS in November. Members of all political parties were present and it provided an opportunity to build consensus on the key axis of the iPRS. Earlier in August, copies of the draft iPRS were sent to political parties for review and comments. A nationwide validation exercise - undertaken for all 15 counties in November involving county superintendents, the development superintendents, county education officers, county health officers and major NGOs. The validation provided the opportunity for the draft iPRS t o be debated and consensus built among the civil society around the key pillars and agenda for the iPRS period. Second WorkingSessionof Cabinet - held 1 December. The final draft, incorporating final comments, was considered and endorsed. 3.4 Main Consultation Messages During the consultations, participants were asked to clearly articulate their main concerns and propose reforms to respond to the development challenges in Liberia. There were many similar views relativet o the reduction of poverty, but some differences did emerge based on the location and circumstances of counties. A review of the outputs of the various consultations suggests that certain policy inferences can be drawn, including the need for capacity-building, wider participation irrespective of region, ethnicity, age and gender, a robust private sector and a sound macroeconomic policy environment. Box 3.1 sets out the key messages heard with respect to each of the four pillars. A summary of views from each of the 15 counties can be found inAnnex I. 3.5 The Bridge Between the 150-Day Action Plan Implementation and Beyond The iPRS uses the 150-Day Action Plan as a launch pad consolidating and building on the progress made during the first 150 days, and identifying and prioritizing actions for the government between June 2006 and June 2008. Moving beyond short-term emergency planning, the government has embarked on its poverty reduction strategy as a tool towards achieving the Millennium Development Goals (MDGs) and the iPRS representsthe beginning of a systematic and strategic approach for development management, which promises to transform the economy and society of Liberia. Crossing the bridge t o sustained development, the Government of Liberia will continue to design and implement targeted strategies and programs for poverty reduction while increasing emphasis on broader national development within the framework of a shared national vision. To this end, the 2006-2008 iPRS will be followed by an MDG-based poverty reduction strategy, covering the period 2008-2012. This will be followed by a socio- economic transformation strategy (SETS) aimed at ensuring sustained growth and development. It will also provide targeted programs to further address the structural constraints that contribute to the persistence of poverty. As seen in figure 3.3, SETS will cover the period between 2012 and 2015 and emphasize social and economic transformation, specifically developing high growth sectors and a globally competitive economy to providethe basis for ensuring widespread prosperity in Liberia. Figure3.3: National Development Planning Process 3.6 Pillarsof the Short and MediumTerm Strategy As an overall framework, the government has prioritized key development issues into four pillars in order to provide core areas of strategic intervention to address poverty in all its dimensions, including income and non-income poverty. The pillars enhancing national security, revitalizing economic growth, strengthening governance and the rule of law and rehabilitating infrastructure and delivering basic services formed the targets of the 150- Day Action Plan and will also extend through the iPRS and the full PRS (seefigure 3.4). In fact, these pillars form the essential building blocks for the realization of an MDG- based recovery, reconstruction and development process and the ongoing fight against poverty. In a post-conflict environment of extreme and widespread poverty with a very weak economy, absence of employment opportunities, little or no socio-economic infrastructure and high household dependency rates, everything is important and at worst, urgent. Yet financial resources and capacities are very limited. As acknowledged by the President of Liberia, sustainable peace will largely depend upon the ability to deliver basic social services in urban and rural areas. Similarly, without basic infrastructure and rule of law, investments needed t o fuel growth will not be forthcoming. Governance and the rule of law provide the institutional base for strong economic performance and poverty alleviation and, justice is what's needed to ensure that grievances are settled through dialogue within the political system, rather than through violence. This mutual reinforcement provides the strong basis and justification for focusing on these elements and represent, in military parlance, the soft 'underbelly' of the Liberian post-war challenge. Figure 3.4:The Four Pillarsas a Strategic Framework Only careful prioritization and a robust sequencing of actions will help the Government of Liberia reach key medium-term priorities. These include: 0 Completing the reform of the security sector; 0 Revitalizing agricultureto ensure growth that is favorable to the poor; a Rebuilding the nation's road network; a Accelerating human resources development; a Strengthening the environment for private sector growth; a Creatingjobs; 0 Promotinggood governance and the rule of law. As the linkages in Figure 3.4 suggest, success in addressing issues within the four pillars is expected to facilitate job creation and improve service delivery, representing an organizing framework to make progress on other issues as well. Broad-based economic growth, with a direct focus on job creation, capacity-building and service delivery are interconnected and mutually reinforcing, laying the foundation for peace, security and development. The framework will be further developed and strengthened during the PRS process. Preliminary results of the 2008 population and housing census along with additional data and inputs gathered through participatory poverty and program impact assessments will be used t o enrich the analysis during the PRS process. For now, a critical effort during the iPRS period will involve building a socio-economic and demographic database to ensure the formulation of a robust poverty reductionstrategy. Key objectives and actions for each pillar during the iPRS period are described in detail in the next four chapters. PART TWO COMPONENTS OF THE STRATEGY CHAPTER FOUR Pillar One: EnhancingNationalSecurity 4.1 Major Challenges Over the years, security forces have been used t o terrorize the population and intervene in the political process without respect for due process or law. Today, the security sector in Liberia is dysfunctional due to several key problems: lack of professionalism; absence of democratic control; absence of accountability t o the rule of law; weak oversight mechanisms; and inadequate resources. A complete overhaul of the armed forces, police force and other security forces following the devastation of the civil war is required to help enhance national security. Another major challenge is completing the process of reintegrating refugees and internally displaced persons (IDPs), ensuring they are back in their communities with productive livelihoods. Liberian youth, which account for nearly half the population, were subjected to marginalization and various forms of exploitation before and during the war and this has created a highly militarized youth population. Lack of interest in the value and promise of education is contributing to the growth of illiterate youth; economic opportunities for trained youth remain very limited. These challenges, coupled with the breakdown of traditional values and norms, make the youth situation a highly volatile security challenge. Ex-combatants and youth do not have access to job and employment opportunities, increasingthe risk of a return to violence. Gender-based violence (GBV) remains prevalent in Liberia and is a special security concern. A GBV task force has been established as part of the 150-Day Action Plan. The United Nations has also put in place additional measures and mechanisms to deal with sexual exploitation and abuse. There are strong interrelationships between security, chronic poverty, justice and peace. The past has shown how vicious and symbiotic the cycle of poverty driving conflict and conflict driving poverty really is. Considering this, the approach of the government in addressing key sources of conflict, including poverty, will be holistic, taking into account the multidimensional nature of peace and security. 4.2 InitialResponses The government's immediate objectives were to launch a reform process to ensure the various security services serve the population and that all Liberians live in a stable and peaceful environment. First efforts by the government, as outlined in the 150-Day Action Plan, focused on: Building a capable and democratically accountable military force by completing the demobilization of ex-combatants, recruiting the first 2,000 Armed Forces of Liberia (AFL)troops and initiating new training programs. 0 Strengthening national security institutions by undertaking a reorganizationof all national security agencies, completing a national security review, developing a national security plan and demobilizing a significant portion of the Special Security Service (SSS). e Continued strengthening of the Liberian National Police (LNP) through completion of severance payments to non-qualified police personnel, continued recruitment of qualified personnel, re-equipping and logistical support t o the LNP, restructuring and reform of the institution and opening women and child protection units in four LNP stations. e Facilitatingthe return of refugeesand IDPsto their homes. e Aiming t o achieve 20 per cent representation of women in the LNP recruitment process, in line with the draft gender policy. Training at the police academy also has an integrated gender component to address human rights abuses and GBV. e Establishing a GBV task force, which is now functioning and chaired by the Ministry of Gender and Development with representation from the Ministry of Justice, LNP, the United Nations Country Team, the United Nations Mission in Liberia (UNMIL)as well as international and local non-governmental organizations (NGOs). A national action plan on GBV will be launched before the end of 2006. e Ensuring that returnees are not discriminated against and have access to sustainable, basic services t o ensure conditions of safety and dignity. 4.3 The EmergingMedium-TermAgenda The government cannot take for granted current improvements in the security situation. Therefore, its medium-term approach is to develop a national security strategy to guide security sector reform, extend national security actions to ensure national safety, security and peace as well as build national security capabilities. These are especially important given the need for Liberia to take responsibility for its own security after the departure of UNMIL. Key elements of activities that the government will be pursuing are: Reforming thesecurity service Intensifying ongoing efforts to reform the security service will include a comprehensive longer-term operational and institutional security reform agenda with national and regional implications in order t o rationalize various security forces, facilitate a change in culture of the security forces, define clear missions and tasks and ensure there are no duplications, overlap or conflicts of interests between security agencies. Reforms will also take into account issues of security around natural resource-richareas. Ensuring gender balance, the integration of gender perspectives in the armed forces and police through representation at all levels and gender equality and human rights training is seen as a key reform component. Strong health programs for security forces with prevention and awareness campaigns for communicable diseases including HIV/AIDS will be undertaken, as well as programs to prevent environmental degradation by security agencies. Strengthening national safety, security andpeace In its efforts t o continue maintaining the peace, the government will begin implementing the next phases of the demilitarization, demobilization, reinsertion and reintegration process to help ex-combatants, demobilized soldiers and deactivated police reintegrate into communities and the economy. The government will also be addressing the needs of youth by ensuring that ex-combatants, especially those who do not qualify for enrolment in the new AFL and LNP, have access to opportunities for training, empowerment and reintegration. Juvenile and young offenders will also have access to real rehabilitation through the corrections system. The government will continue t o protect returneesfrom discrimination and provide access to sustainable, basic services for a safe and dignified return. Building national security capabilities Ensuring that the new security agencies can maintain the peace following the departure of UNMIL is a key preoccupation of the government. As a consequence, efforts to train and rebuildthe security forces will be intensified. Other key priority areas are: ensuring a smooth transfer from international peacekeeping t o national security institutions in assuming the role of maintaining peace and security in Liberia; strengthening the judiciary and completing ongoing reform measures t o enhance peace, human rights and justice, deepen democratic values in Liberian culture and substantially reduce gender- based violence; and building and implementing a conflict early warning system to monitor and respond to threats of uprisings/insurgencies, as mandated by the Economic Community of West African States for all national governments in the sub-region are the focus of the Government. 4.4 The InterimPoverty ReductionStrategyAgenda The agenda for the Interim Poverty Reduction Strategy period, focused on maintaining peace and security, is presentedinTable 4.1 . m.I m v) a.. f s.... . -J s 7 n s n s b 0 r-0 0 N 0 b 0 (v 0 c (v r"2 m C T 3 b co co 0 0 0 0 N 0 0 N rJ a C a a C 7 J J 3 -l -l CHAPTER FIVE PillarTwo: Revitalizingthe Economy 5.1 Major Challenges A quarter century of crisis coupled with decades of fiduciary mismanagement has left the Liberian economy substantially deteriorated. Today, Gross Domestic Product (GDP) is one eighth of 1980s pre-war levels and, as productive sectors such as agriculture and forestry, mining, manufacturing and construction collapsed, so too did social and economic infrastructure. Economic management capacity weakened dramatically, infrastructure collapsed and the economy became dominated by a large informal sector characterized by low productivity and lack of innovation. Although there is a deficiency in up-to-date and reliable data for economic management and monitoring, major macroeconomic imbalances - reflected in large external and domestic debt overhang - have left the debt/export ratio of Liberia in excess of 3,000 per cent. Designing appropriate policies and building critical economic management capacities to revitalize the economy (Annex 2) and create sustained employment opportunities are major challenges for the government. Unemployment in the formal sector, according to one source, is estimated at a staggering 80 per cent.' High levels of unemployment amongst youth undermine poverty reduction and significantly contribute t o security concerns. The collapse of infrastructure, agriculture, manufacturing and, t o some extent, United Nations Security Council sanctions have all had a major impact on employment. Collapse of the timber and diamond trade are estimated t o have lowered GDP by 31 per cent" and resulted in losses of 25,000 jobs in timber and 12,000jobs in diamonds." The deterioration in rubber production has shrunk 50,000 jobs down t o 10,000.'2 Agricultural incomes in the crop sector have also plummeted, with productivity for cereals falling from 1,290 kilograms per hectare (kgs/ha)in 1998 to 917 kgs/ha today.'' Crop production is still below year 2000 levels. Sustainable use of natural resources and strong environmental management is crucial for enhancing broad-based growth, creating meaningful jobs and reducing poverty. Proper natural resource management is also critical in reducing corruption and exploitation of resources to sustain conflict. A poorly utilized and polluted environment results in land degradation, which will not be suitable for agricultural productivity, human settlements and environmental sustainability. Although environmental laws and regulations are in place in Liberia, specific standards have not been set t o monitor activities and enforcement capacity is weak. Guidelines for conducting environmental impact assessments or sustainable use of natural resources are yet to be established. Additionally, there are major policy deficits regarding land use and tenure, with significant implications for growth in agricultural employment. Significant inequities in income and assets exist and a significant gap regarding women's access to and controlling of land, economic information and credit. Although women make up a large percentage of small-scale traders in the markets around the country, no policy exists to support small-scale enterprises. A lack of reliable and timely data is a critical issue faced by post-war Liberia. Reliable data are required for policy formulation and implementation and is necessary to monitor progress and promote accountability and transparency in decision-making processes. Decades of abandonment have left Liberia's capacity for information and statistical 9 There hastobe strong caution onthe data, particularlyonthe labor market, since there have beenno recent laborforcesurveys. - 10-IMF2006 11 .Liberian Faderationof Labor UnionsILFLUI 12-LFLU 13 EconomicIntalliaanceUnitdara base. 2006 - gathering, analysis and management in a serious state of disrepair. Strengthening the national statistical system and information management of the government will mean considerable investments in human capital, development of a national information technology policy, investing in an information technology infrastructure, logistics and finance. 5.2 Initial Responses The government's short-term objectives have been to stabilize the economy, create jobs and restore the government's credibility in using the country's scarce resources efficiently and effectively. To guide its actions, government quickly finalized and embarked on a Staff Monitored Program in conjunction with the International Monetary Fund (IMF) in order to strengthen economic management and establish the basis for further progress under a successor fund program and eventual debt relief under the enhanced Highly Indebted Poor Country (HIPC) initiative and ultimately the multilateral debt relief initiative. Simultaneously, the government introduced key components of the Governanceand Economic Management Assistance Program (GEMAP) and formulated and implemented a set of targeted interventions within the 150-Day Action Plan. Of critical importance was the government's quick establishment of a functioning budgetary process, which covered preparation, execution, internal and external controls and reporting. The government is also in the process of strengthening the main revenue-generating agencies and working to make the operations of the Central Bank of Liberia (CBL) and the banking system fully market-based and transparent. Key achievements to date include: Successful implementation of an ambitious IMF Staff Monitored Program, resulting in greater focus on reforms needed to revitalize the economy and move Liberia on the path of orderly relationswith financial institutions; Implementation of measures to strengthen tax compliance, leading to a significant increase in revenues between February and October 2006; Re-establishment of the cash management committee and implementation of related expenditure policies and financial management rules t o contain spending within available cash revenues; Measures t o clean up the civil service payroll of 'ghost workers', resulting in substantial budgetary savings; Settlement of a substantial part of civil service salary arrears, accumulated by previous administrations; Verification of domestic debt and vendors' arrears accumulated by the previous administrations and development of a resolution strategy aiming to bring order and confidence to the financial relations between the private and the public sectors; Increased transparency in fiscal management through regular publication of fiscal reports; Initiation of the review of concessions and contracts granted under the National Transitional Government of Liberia (NTGL); The creation of the public procurement and concession commission to curb corruption in procurement and concessions processes by the private and public sectors: Reform and improvements in CBL operations focusing on making the banking system fully market-basedand transparent; Preparation and publication of the monetary policy framework paper; Rebuilding of main revenue generating agencies Robertsfield International Airport, National Port Authority, Liberia Petroleum Refining Corporation, Forestry Development Authority (FDA),and Bureau of Maritime Affairs (BMA); Cancelling non-compliant forestry and port concessions; 0 Provision of seeds and tools to at least 14,000 farmers, supplies for 1,800 fishermen, training assistance for at least 2,000 ex-combatants and food assistance for about 16,000 families through food-for-work programs; Launchingthe Liberia Emergency Employment Program (LEEP)aimed at engaging more than 17,000 young people in some quick employment projects within the next year to t w o years. With regard to environmental and natural resource management, the Environmental Protection Agency (EPA) is now institutionalized thanks t o the establishment of its policy council and board of directors. The Forestry Reform Monitoring Committee (FRMC) was established to tackle commercial conservation and community aspects of the forestry sector, though the commercial aspect has been the main focus thus far. The passing and enacting of the Forestry Reform Law of 2006 will not only help ensure that the sector is managed in a sustainable manner, it was a requirement for fully lifting sanctions on timber. A United NationdGovernment of Liberia Rubber Plantation Task Forcewas also instituted to ensure proper administrationof state owned plantations. A major constraint on effective policymaking has been the dearth of reliable data and statistics. Before the war, the Ministry of Planning and Economic Affairs (MPEA) regularly collected data price indices, trade, industrial production and energy consumption and conducted specialized surveys on, for example, agriculture, demography, population, labor force and employment. With the establishment of the Liberian Institute of Statistics and Geo-Information Services (LISGIS) by an act of legislation in November 2004, Liberia now has a dedicated national agency responsible for the collection and publication of official statistics. A substantial amount of investment is needed to approximate pre-war capability. Targeted programs will be developed in collaboration with partners to build LISGIS' capacity in order to be able t o collect, analyze and disseminate statistics on national accounts, consumer price index, trade, environment, food security, and to conduct population and housing censuses as well as demographic and health surveys. LlSGlS is presently conducting the 2006-2007 Liberia Demographic and Health Survey and presented the roadmap of the 2008 Liberia Population and Housing Census to partners. Investment is needed to successfully carry out the key phases of the census, which will provide vital, up-to-date socio-economic and demographic information with benchmark data disaggregated by sex, age and economic/social characteristics. The cartographic work, which is expected to start in January 2007, will help build a new sample frame. 5.3 The EmergingMedium-TermAgenda A key objective is to rapidly accelerate the pace of economic growth as the foundation for poverty reduction and sustained development. Areas that show the greatest promise for a rapid rebound are agriculture (including fisheries), forestry, wood processing, diamonds, iron ore, rubber and urban services. Manufacturing is also expected to contribute to growth, starting with simple products such as furniture and beverages. Later, agro-processing and light manufacturing products could be developed to service local demand and export competitively in the region, Europe and United States. On the basis of governmental policy reforms, the gradual rebound of exports as remaining United Nations sanctions are lifted and donor-financed reconstruction activities, GDP growth is expected t o approach 7-8 per cent over the next year, a rate which the government will aim to sustain over the medium term. Fiscalpolic y andmanagement Building on the progress achieved in its first 11 months, the government will implement several measures aimed at broadening the tax base and increasing revenues, including: expansion of the pre-shipment inspection program to rural ports; expansion of the computerized bank payment slip revenue collection system to cover miscellaneous taxes, the Port of Monrovia and Robertsfield InternationalAirport; increasingthe excise tax on beer and cigarettes; reducing import tax exemptions, including through better management and monitoring of non-governmental organizations and religious organizations; redefinition of the base of the goods and services tax, in line with the provisions of the 2000 Liberia Revenue Code (LRC); rigorously implementing a program t o collect overdue tax/duty obligations; and strict enforcement of Executive Order Number Three, which centralizes revenue collection inthe Ministry of Finance (MoF). The government will advance work on the comprehensive import tariff reform t o move Liberia towards the Economic Community of West African States (ECOWAS) Common External Tariff and begin implementing other recommendations from the May 2006 IMFtax policy mission (for example, on the income and goods and services tax). A key focus will be to uproot corruption in revenue administration, in particular by addressing weaknesses in the large taxpayers' and customs units and restructuring the revenue department, including the possibleoutsourcing of customs with support from the European Commission. The government will continue the effective operation of the cash management committee t o ensure that spending is contained within the actual monthly revenue envelope and follows prioritized cash plans. With technical assistance from the IMF and World Bank, as well as from other partners, the government will work to strengthen public expenditure management capacity through the implementation of an interim commitment control system and full implementation of a new public procurement and concessions act. A substantial expansion of technical assistance and capacity-building under the World Bank- financed resource management unit will further strengthen financial management and policy making at the MoF, which includes automating processes. To ensure more efficient management of an important revenue source, the government has submitted legislation to integrate the BMA into the MoF. Similarly, the government has submitted legislationto integrate the Bureau of the Budget (BOB)into the MoF, with a view to improving budgetary processes. A key element of these legislative changes is limiting the authority of the executive branch in effecting budgetary transfers without legislative approval. Further, the government has eliminated the practice of a parallel 'development' budget, thus ending the fragmentation of the budgetary process and allowing the exercise of an integrated oversight of resource allocation. Recurrent expenditures aimed at restoring the orderly functioning of public administration still dominate the budget, limiting the scope for shifting resources into more spending for the economic and social sectors, which together only account for about 30 per cent. While such a pattern of spending is understandablein a country emerging from prolonged conflict, the government is committed to containing personnel-related spending in order to facilitate the financing of programs with visible, on-the-ground impact. Efforts t o remove ghost employees from the payroll and to facilitate the departure of redundant and retirement-age staff have progressed well. As a first step in addressing the grossly inadequate civil service pay levels, the budget includes an envelope t o increase civil service salaries while cleaning up payroll irregularities as a means of containing personnel spending. Monetary and exchangeratepolicy The main objective of the CBL will be to maintain price stability, as its monetary policy role is limited due to the extreme 'dollarization' of the economy. The current system of foreign exchange auctions will continue as a way t o manage the pace of increase in domestic liquidity. Efforts will be made to build up foreign reserves consistent with the objective of maintaining stability in exchange rate. Strengthening the capacity of the CBL will give it the ability to manage liquidity and supervise the banking sector to facilitate development of the financial sector. Notwithstanding the projected widening of the trade deficit, external reserves are expected to increase slightly. Inflation should remain modest at around eight percent, underpinned by a relatively stable exchange rate. The Liberian economy continues to operate under a dual currency system United States Dollars and Liberian Dollars. A range of reforms t o pursue credible macroeconomic policies, develop Liberia's financial system, improve the health of the banking sector, strengthen governance and secure peace and stability will, in due course, allow for a market driven 'de-dollarization' of the economy. Management of state-owned enterprises While unlikely t o be accorded high priority during the implementation period of the Interim Poverty Reduction Strategy (IPRS), initial thinking will be further deepened with respectto the management of a number of state owned enterprises, presently benefiting from direct support by the government. The principal objective would be to reduce, as quickly as possible, the dependence by most of these entities on the public treasury, primarily through processes of capacity development involving their staffing and systems. The government is also committed on a one-off basis to absorbing significant liabilities inherited form previous governments in any of these enterprises, with a view to assisting them to move to commercial feasibility as quickly as possible. Most state owned enterprises are already under strict monitoring and restructuring within the GEMAP framework, with many already showing positive signs of enhanced fiscal and operational performance. Once the state owned enterprises are stabilized, clearer national strategies would be formulated in respect of their longer term practicality, either through privatization of their management via contracts, concessions or outright equity, or other financial restructuringoptions. Revitalizing agriculture Prior to the war, Liberia achieved over 50 per cent food self-sufficiency (mainly rice and cassava). It also produced cash crops (rubber, cocoa and coffee) from which farmers earned income and the government received tax revenue, foreign exchange and other benefits. Poor governance and civil wars all but wiped out these gains, leading to even lower labor and land productivity and minimal economic returns that characterize the smallholder sub-sector where the majority of Liberians earn their livelihood. The government recognizes the major role the agricultural sector could play in economic recovery. Agriculture is the largest productive sector historically and can provide a proven and reliable base for transitioning Liberia'swar-affected people and communities from relief t o recovery and eventually development. The 'Statement of Policy Intent for the Agriculture Sector' and associated 'Action Plan 2006-2007' provide a strategic framework for beginningto overcome obstacles t o agricultural development and revitalizing the sector inthe context of the iPRS. Bearing this in mind, specific attention will be paid t o the redevelopment and expansion of agricultural exports, especially in traditional areas of rubber and forestry products. Partly within the framework of the African Growth and Opportunity Act (AGOA), progress in the accession to full membership is already underway and related efforts will be made to revitalize production of other crops such as coffee, palm oil and cocoa for exports, with an emphasis on adding value domestically insecondary processing. An important element of the strategy for agricultural revitalization and development is reenergized management and administration of private rubber plantations; activities at many were severely impaired during the civil war. Consequently, enormous tracts of lands previously acquired for rubber production have since been abandoned or are now being inefficiently hoarded or put to less economic uses. Using all necessary tools at its disposal, including taxation where necessary and through a more comprehensive review of land tenure and management arrangements, the government will move decisively to end inefficient practicest o assure enhanced economic benefits from these plantations and other areas of inefficiency. An active policy of land tenure will be formulated t o respond to situations of this nature. In addition, unlike practices in the past, public officials will no longer be permitted to procure from the state and speculatively hoard extensive holdings of private real estate property. Revitalizing mining and forestry Through increased government revenues and job creation, these sectors' contributions will have important implications for rebuilding social services such as health care, schools and water and sanitation critical to the reduction of non-income poverty. Moreover, the multiplier effects of these sectors will provide a major boost for the economy. To remove uncertainty for private investors and rapidly pave the way for Liberiato start tapping into the benefits, the government will expedite decisions on the recommendations of the review of contracts and concessions signed during the NTGL period. The government will also take advantage of the newly lifted forestry sanctions within the provisions of the recently enacted Forestry Reform Law of 2006. In addition, the necessary steps t o meet international requirements and obligations to remove diamond sanctions will be taken. The government is committed t o adopting relevant international protocols and ensuringthat earnings from extractive industries are used in an accountable and transparent manner t o develop the economy for to benefit all Liberians. To help in this process, the government has solicited the assistance of the Extractive IndustriesTransparency Initiative secretariat on its plansto join the initiative. While working to restore traditional sources of growth (mining, rubber, timber), the government will promote diversification in order to reduce the extreme vulnerability of the economy to international commodity price fluctuations. To do this, it will work with the private sector in identifying potential new sources of growth and on the development of related sector strategies. During the iPRS period, sector studies will be undertaken t o identify opportunities within the global marketplace, examine market requirements and identify constraints. Natural resourceand environmentalmanagement A key objective over the medium term is to strengthen natural resource and environmental management. Although the focus of the FRMC has been t o tackle commercial, conservation and community aspects of the forestry sector, the latter two have not yet been adequately addressed t o promote sustainable use of land and other natural resources. Revitalizing and empowering the EPA is also considered a key step t o effectively monitor and enforce environmental protection and management. Subsequently, necessary guidelines and standards such as for the environmental impact assessment and pollution control will be formulated and implemented. It will also allow relevant line ministries and agencies to face key issues emerging inthe environmental sector. Enablingprivate sector recovery anddevelopment The economy of Liberia has traditionally been private-sector based and the country was once renowned for its open door policy towards foreign private investment. The government believes that the private sector must remain the main engine of growth in Liberia, propelling investment, creating jobs and facilitating the delivery of basic services. Growth led by the private sector will come mainly in the agriculture, mining, forestry, urban services and smaller manufacturing sectors at the formal and informal levels. But the private sector in Liberia also faces several policy, infrastructure and capacity constraints. During the iPRS period, the government will begin t o address critical structural constraints and impediments to private investment and economic activity. These include: Large informal sector - Liberia has an exceptionally large informal sector, currently generating as much as four times more employment than the formal sector. While it originally helped cushion the impact of an economic collapse, informality has significant economic costs, including high levels of tax evasion. The challenge for the government will be to implement programs and policies to help improve productivity and working conditions in the informal sector and correct credit market failures to enhance access to capital. As such, government interventions will focus on providing training and skills upgrading, enterprise support activities and enhance available credit facilities through micro finance and small and medium scale enterprise funds. In designing these interventions, special attention will be given to the obstacles faced by women and youth in gaining employment and starting businesses. Access to energy A lack of electricity in most of Liberia has come as a result of - the destruction of the public national power grid; public energy generation and grid supplies are only now beginning to re-emerge in parts of Monrovia. Most energy will be fueled by private generators. Restoring generation capacity and grid distribution to ensure regular power supply to the country is critical and the management of fuel costs in production structures of enterprises will therefore continue to be major challenges in the coming years. Access to finance - Limited access to finance, especially for women is a major economic constraint. Liberia's financial sector is still rudimentary, dominated by an oligopoly of commercial banks, most of them weak. Desperately required micro-finance needed t o kick start smaller businesses is only embryonic and supply remains well below demand for these services. Land ownership and tenure - Land issues are a major bottleneck and reform is needed that includes changes in the traditional land tenure system to ensure more private ownership as well as land distribution t o reduce long tenured excessive holdings and enhance land use. Tax policy - The corporate income tax rate of 35 per cent is on the high end of the range in West Africa. The government will consider reducing it to 30 per cent in the context of the 2007-2008 budget in order t o providing adequate incentives to investors and eliminate the need for special tax concessions. Likewise the government will also consider reducing the presumptive 4 per cent turnover tax applied t o small traders and businesses t o 3 per cent, in line with prevailing rates in the region, which are anywhere from 2-3 per cent. Investment code - The current investment code has been in effect since 1956 (amended in 1975. It is out of date and inconsistent with the 2000 LRC. It needs to be revisedt o remove all references to tax issues, so that all tax laws are covered only inthe LRC and instead, focus on non-tax factors inhibiting investment (for example, the discriminatory legal framework for Liberian versus foreign investors). Telecommunications - The telecommunications market needs modernized laws and regulations with a clear separation of policy, regulatory and licensing functions. The government will soon submit legislation to address these issues and pave the way for further expansion in service provision and tax revenue, as envisaged in the budget for the fiscal year 2006-2007. Administrative and Regulatory Issues - A host of administrative and regulatory barriers severely limit the ability of businesses to operate effectively. These include excessive business inspections by public officials, cumbersome work permits and other bureaucratic procedures, visa difficulties, unclear investment procedures and regulations and informaltax and customs procedures and charges. The MoF, Ministry of Commerce and Industry (MoC&I) and the National Investment Commission (NIC) are initiating work with the Liberian Chamber of Commerce, Liberian Business Association and other professional associations t o address these issues in the context of forging a stronger public-private partnership. A mini-diagnostic study of the local business environment, conducted by the Foreign Investment Advisory Service of the World Bank, presented a number of options for addressing the constraints in the enabling environment for private investment. The government has already taken steps to implement some recommendations and will implement most of the others in the course of the next year. Employment andjob creation One of the government's most important objectives during the iPRS period is t o promote the rapid creation of significant numbers of jobs. Given the severity of the post-conflict unemployment situation currently confronting Liberia, rapid job creation is central t o maintaining security (especially jobs aimed at ex-combatants and youth), jump-starting the economy, rebuilding infrastructure, generating income and fighting poverty. The challenge is to shape the revival of the growth process to promote t o the fullest extent possible creation of productive, remunerative and decent employment for both men and women. This requires emergency short-term measures for immediate job creation as well as the establishment of an enabling socio-economic environment over the medium term to permit the private sector to lead the way in generating sustainable and productive employment. Expanding productive employment opportunities represents the core exit strategy from poverty. The majority of jobs will be in the private sector: agriculture, mining and minerals, forestry, urban services and some light manufacturing. However the public sector, in cooperation with partners, has a key role to play, especially through public-private partnerships focused on labor-intensive infrastructure projects, urban sanitation and clean-up projects and other related initiatives. The government has already launched one employment initiative and will be implementing specific steps in the coming months to generate further employment (described in box 5.1). Statistics for development Since a major challenge in' economic analysis and policy formulation stems from the absence of reliable and timely statistics, the government will continue making sustained efforts to ensure national capacity for information gathering and dissemination is ~trengthened.'~ A strategy for the development of the national statistical system will be prepared, with LlSGlS at the core. Key surveys for poverty analysis are the foundation for policy formulation and planning of interventions. Ensuring that adequate data and statistics are collected on issues pertaining to youth, gender and environment is particularly important. Gender-based economic planning is made difficult by the lack of gender disaggregated data and information. Government planning and policymaking processes, before the civil war and currently, are based on gender-blind data and statistics. Changing this will necessitate revising the approach to data collection by governmental ministries and agencies t o ensure they are gender disaggregated. The World Bank, the United Nations Development Fund for Women and other partners have agreed to provide assistance inthis regard. In addition, it is crucialto develop a national capacity t o monitor and evaluate environmental information, which would be used t o track progress on achieving the Millennium Development Goals (MDGs). The capacity to monitor water quality standards is the most glaring of the relevant examples. Unfortunately, LlSGlS lacks the technical skills needed to operate various stages of the data management process. In order to operationalize the agenda of the government with respect to data and statistics, capacity will need to be built within LISGIS. Also, the capacity to collect data and undertake analysis for monitoring and evaluation as part of the implementation of the iPRS and full PRSPwill be developed. 5.4 The Interim Poverty ReductionStrategy Agenda During the iPRS, period activities under the pillar for revitalizing the economy will focus on more efficient management of national resources, raising economic growth and creating jobs. These activities are presented inTable 5.1. 14 -The governmentis buildingon partners' support to develop its statisticaldevelopment strategy Icf.A Roedmap for the Developmentofa NafionaiSfrategy for SfafisricalDevelopmenfin Liberia. Shorr TermAcrions andSfraregicDirecfions. SecondDraff.World Bank GDDS Support to Liberia lStrode. April 200611. \ 3 3 N L P e En Y7 m 1 + m 0 8> m 3 7m U m I r- r- 0 > 0 0 N 0 N 3 m L. L P n aD n0 i 23 D m z0 3 z z 7 a W !! n E U m c 0 4- TJ J n L U +0 m Z C 5 .0 c .e - c o s - L U 4- I? m m t2 c I? -5 0 3 ?> ll 3 3 N z5 a ? C w P 2 U ea L nm L) 2 '0 s -F0 ; v, W -I m 0 0 N m c 7 I ?i e VI L W .--0 +- W C l W '0 m - L 5 (D 0 0 N Y 2a 3 CHAPTER SIX Pillar Three: StrengtheningGovernance and the Ruleof Law 6.1 Major Challenges The series of crises that besieged the Liberian nation over the last quarter century from war and mismanagement to human rights abuses and deepening poverty - can be blamed largely on bad governance. The war years were a low ebb in the history of Liberia, leading to widespread human rights violations and abuses such as deliberate and arbitrary killings, disappearances, torture, forced child soldiers, targeting of civilians, rape and sexual violence against women and children. Persistent bad governance practices have given rise to challenges that must be faced in the Interim Poverty Reduction Strategy period and beyond, including a change in the value systems and mindset of Liberians as well as a restructuring and strengthening of central and local governance institutions, systems and processes. Women and children suffer from violence and abuse and do not enjoy the same rights as men. Traditional laws and practices that discriminate against women remain operational and, while the pivotal role of women in restoring peace to Liberia is widely known, few women's organizations have the capacity to engage in policy making and fully participate in the new democratic environment in Liberia. The cohesion and political awareness women gained as a result of their role in the peace process is a significant opportunity to build upon and strengthen women's organizations and engage them in the processof reconstruction. 6.2 InitialResponses Since the signature of the Comprehensive Peace Accord and as part of the recently completed 150-Day Action Plan, the Government of Liberia has begun to address challenges and lay the foundation for good governance to restore hope in the justice system. Responses were designed to: a Redefine and refocus the mandates, structures and functions of public institutions; a Develop a comprehensive anti-corruption policy, strategy and implementation framework; Define a successor body to the Governance Reform Commission (GRC) to continue monitoring the governance reform agenda and process; Establish the Truth and Reconciliation Commission (TRC) and the Independent National Commissionfor Human Rights; e Develop a more professionaland efficient civil service commission and cadre; Initiate discussion on the relationship between the central and local governments. The government has made significant progress in these areas. Hope is being restored. The anti-corruption crusade has begun (Box 6.1) and efforts thus far have been yielding positive results. Transparency and accountability in public financial management at all levels has increased and continues to improve, as indicated by the sharp increase in revenuesand the operations of the cash management committee. The government, along with its international partners, has also established institutions to address conflict related legacies of the civil war and that will make the Liberian context more responsivet o development interventions. Four of these stand out. The TRC was established and has begun work to account for atrocities committed between April 1979 and October 2003 as well as to foster reconciliation within and between Liberia's polarized communities. The GRC is working to restore and reform institutions of government and t o ensure democratic self-governance that is inclusive, participatory and just. The Independent National Commission on Human Rights was established to fight a culture of impunity and protect and promote human rights, including economic, social and cultural rights. The University of Liberia established a Center for Conflict Transformation which aims t o undertake research, offer courses and give policy advice. The capacity of Liberia's civil society inthis area has noticeably increased; there are at least 20 national non- governmental organizations (NGOs) that focus on peacebuilding initiatives and conflict sensitive development issues across the country, as well as many faith-based organizations and community-based organizations that undertake peacebuilding and conflict resolution in a variety of forms. With respect t o gender inequities, some progress has been made. Women in the legislature account for about 15 per cent of the entire body while about 33 per cent of county superintendents are women. Women constitute 31 per cent of the cabinet but it is estimated that they constitute only 4 per cent in the formal sector, often in the lower cadres of employment. Women are grossly under-represented in the judiciary with an estimate of 1 per cent in this sector. A gender-based violence (GBV) plan of action has been finalized. Its implementation will improve coordination of GBV interventions and address the multi-dimensional facets of GBV prevention and response. However, owing t o the effect of conflict, there are serious institutional and technical capacity gaps to adequately addressing gender equality issues. 6.3 The EmergingMedium-Term Agenda The key objective of the government is t o strengthen governance and the rule of law to ensure Liberia does not witness conflict and gross violations of human rights again. Its aim is to lay the foundation for a new democratic culture, creating balanced development and promoting a culture of accountability. The purpose of governance will be to strive to meet the collective aspirations of the people. As such, the respect of rule of law in all spheres of national life, provision of equal opportunities and better economic and natural resources management to benefit all will be the cornerstone of the national agenda. Government efforts will be aimed at unleashingthe potential of each and every Liberian, ensuring good economic governance to lay the foundation for a strong economy that is sustainable and growing rapidly, as well as rebuilding national institutions to guarantee rights assured t o all Liberians by the constitution. Transparency, accountability and the rule of law will be the watchwords of governmental policies. Key elements of the emerging short t o mediumterm agenda are highlighted below. Reforming andrebuilding thepublic sector The destruction of public institutions is a critical constraint on which the government will be focusing attention. Political patronage and the effects of war mean that Liberia's current civil service disproportionately reflects high numbers of unskilled workers with little technical capacity necessary to deliver services. The dysfunctional public sector is in need of both short-term change management as well as more comprehensive reform. Ongoing reforms will be deepened to ensure the public administration becomes an agent for change, development and socio-economic transformation. Efforts will also be focused on creating operational and institutional capacities for public sector management, service delivery, public policy analysis, formulation, implementation and monitoring. The government will also seek support to equip government ministries and agencies with the hardware needed to make them functional and effective. The government will also be exploring with bilateral and multilateral development partners the broader parametersof capacity-building needs in Liberia. Reducingcorruption Rampant corruption in Liberia has prevented national development and contributed significantly t o the pervasiveness of poverty. The government has therefore declared war on corruption and will use all conceivable legal resources to tackle it forcefully and effectively to recapture state resources for national development. The government has therefore adopted a zero tolerance policy to be implemented within the framework of a comprehensive anti-corruption strategy and law (Box 6.2). In addition to the anti- corruption strategy and act to be passed and implemented, GEMAP will be used to develop systems, institutional mechanisms and to build capacity for the fight t o eliminate corruption in Liberia. Decentralizing politicalgo vernanceandsocialresponsibilities Linked to national reform efforts will be a strategic program to decentralize and disperse power from Monrovia in order t o bring it closer to the people. The design and implementation of the decentralization program will be guided by a strategic review within a full participatory process and sound legal framework. When designed and implemented, it will be accompanied by strong capacity-building, institutional development programs and resource allocation to ensure that local authorities understand and can manage the new responsibilities. Another key priority will be developing strategic responsest o promote national, regional and local inter-group reconciliation, as well as to resolve key conflicts that undermine national security and poverty reduction. While a particular ministry or government institution might take the lead on training, capacity-building or even the identification of strategic responses t o conflict, innovative inter-ministerial responses are likely required in order to properly address protracted, multi-faceted conflict factors. Strengthening the rule of law and respecting human rights The Government of Liberia will promote and defend the rule of law and human rights with attention focused on strengthening core institutions such as the police, prosecution, judiciary and corrections service, the legislature and civil society through training, capacity-building and infrastructural improvements. The government will also strengthen programs for increased access to justice and legal literacy for all Liberians, with aspecial focus on women and children. A thorough review of Liberian laws, including traditional laws, alongside international obligations and human rights standards will help identify existing gaps and required law reforms. The government understands the importance of educating future judges, prosecutors, public defenders and lawyers and will work t o strengthen law schools and legal education in Liberia. Also vital to promoting a democratic culture and strengthening the rule of law are institutions such as the Independent National Commission on Human Rights. Reforms embarked upon by the government will enhance the balance of power and ensure the three branches of government can provide checks and balances needed for democratic development as well as judicial independence. Conflict-sensitive policymaking andconflict management Though significant efforts to address the conflict legacy of Liberia are already being made, the need for policymaking and planning to be conflict sensitive and for conflict management capacity t o be enhanced at all levels of government is critical to poverty reduction. To achieve this, training and capacity-building focused on analytical and evaluative skills for conflict-sensitive development will be given to representatives in all ministries and local government institutions. Training in conflict management and resolution will also be conducted and mechanisms put in place within ministries and local government institutions to resolveconflict. Addressing gender inequities The government is committed to developing new mechanisms and systems of gender mainstreaming in the design, implementation, monitoring, evaluation and reporting of all policies, plans and programs. To guide this process and to advance the agenda for gender equality, a national gender policy will be developed to provide a legal framework and basis for various efforts t o ensure gender-based development. Efforts will include filling institutional and technical capacity gaps to adequately address gender issues, including equipping the Ministry of Gender and Development (MoG&D) to lead governmental efforts at ensuring gender equity. The Ministry of Justice (MoJ) and MoG&D will jointly develop and carry out a program to strengthen gender justice. Given the absence of data, information and analysis on the situation of women in Liberia, a key emphasis will be information gathering, data collection and policy analysis. A national gender assessment, on which to base gender-responsive interventions, will be undertaken as available data are obsolete. The gender study will highlight disparities, including those between male and female-headed households, in an effort t o understand the constraints and dynamics at work between individuals and household types. This would allow the systematic integration of gender equality into national programs, including national plans, policies and annual budgets. Strengthening the environmental rulesandregulations The lack of interest and weak technical, administrative and institutional capacity has affected proper environmental protection and management programs in Liberia. Due to lack of good governance and rule of law, natural resources were used by various warring factions to fuel civil conflicts. The government will strive t o ensure that all activities are initiated within the framework of environmental sustainability. Mechanisms will be developedt o enforce and monitor the environmental rules and regulations. Involving broaderparticipation in thegovernanceprocess Governance is a collective endeavor and not just the domain of government, especially in Liberia following a quarter century of crises. The Government of Liberia will continue t o engage the public and international partners in its rebuilding and reconstruction efforts. This is particularly important because broad support from local and international partners is neededto ensure the success of government programs. In engaging the public, the government will strive t o support the development of a strong civil society that fully participates in governance and a media that is open, free and impartial t o allow journalists to promote dialogue and ensure that officials/leaders are accountable to the public for their actions. Civil society and the private sector will be challenged to advance and defend the interests of the people and to help in finding solutions to social, economic and political problems as well as provide a forum for free expression and collective action. The government is committed to creating strong partnerships with civil society organizations (both nationally and internationally) and the private sector to collectively fulfil the needs of the people. The government will create an enabling environment for civil society organizations to operate, close the regulatory vacuum and collaborate with development partners to provide capacity-building programs for civil society organizations and the media in an effort to better fulfil their roles in building a new, democratic Liberia. The government will also ensure that Liberia continues t o be a good neighbor in West Africa and that it maintains good international relations. Given the massive cost of reconstruction, the social needs and the unsustainable debt burden (including domestic debt), closer cooperation with the donor community and multilateral financial and development institutions is a high priority for the government. Enhancing youth development andinvolvement in the developmentprocess The new national youth policy highlights the need for youth t o be institutionally included in decision making. Next steps will begin with the institutionalization of the national youth policy through enactment into law by the legislature, committing the government to policy formulation and budgetary allocation to positively impact youth in a number of key areas, especially education and life skills, economic governance and HIV/AIDS, among others. Approaching youth issues in a holistic manner would include enabling the implementation of the national youth policy action plan, which maps out strategies for the implementation of the policy. A critical area for Liberian youth over the medium and longer term is expanding participation in sports. Considering how many young people are not fully or gainfully employed at the moment, opportunities abound to tap into the enormous national potential from sport. Sport could serve as a safety valve for over-zealous unemployed or underemployed young people who otherwise fall prey to demagoguery and political exploitation. Sport could also be an avenue for limited labor absorption if appropriate means are used across the nation to structure sport training and other activities. 6.4 The InterimPovertyReductionStrategy Agenda In addressing these elements during the iPRS period, the government will focus on building effective institutions that are able t o support democratic governance, justice and human security. Targeted activities and results to be achieved during the iPRS period are presentedin Table 6.1, I W I F 3L a 9 + -Em E 3 C 4 EF 2 L 0 U 0 + 0 W t 4- 3 2 a 2 Lu I I- n 2 a W 0 22a90 (3 Q 5!2 n K 9 tn 3 3 YK n m W +- 0 .-c v) z .-3 c .-e .I- W C 0 .-+- C 0 t- +- L +-0 I? .-c!!? ._J v) w cE .-CE m -0 0 C C t 5Wm 5m 5m c ?? t-?? CL 22 - 0 $ r-" .-e 0 .-J .I- O .-e!!? C 0 .-.-CE e -0 .-m C 5m x?? ~ ~ 3 5 I- I- 0 O 0 0 N N ' m 3 J 7 3m CHAPTER SEVEN Pillar Four: Rehabilitating Infrastructure and Delivering Basic SocialServices 7.1 Major Challenges The Government of Liberia came to power in January 2006 and inherited infrastructure that was in a total state of disrepair as a result of the war and years of neglect. Roads, telecommunications, water and sanitation, schools and health care facilities were, for the most part, devastated. Today, the task before the government is to rehabilitate the infrastructure to create necessary conditions for broad-based growth and poverty reduction. Health, education and other services must focus especially on youth and women who too often are marginalized from such services. Health activities must concentrate on malaria, HIV/AIDS, diarrhoea and other major diseases that kill many Liberians. Increasing school enrolment, offering more access t o and higher quality of training opportunities as well as providing more recreational and sporting activities will help improve the security situation, strengthen the foundation for growth and poverty reduction and train a new generation of leaders for Liberia. Mobilizing the substantial financial and human resources required and, in some cases, relocating people from one location to the next are core to the inherent challenges. 7.2 Initial Responses The 150-Day Action Plan of the government set out a number of short-term objectives that were pursued, including: Beginning the rehabilitation of several hundreds of kilometers of roads as well as a few bridges; Rehabilitating about 36 high schools, 39 clinics and four community health facilities around the country; Using 1 million United States Dollars (USD) from improved tax collections to finance community projects inthe 15 counties of Liberia; Beginning to rebuild the electricity grid with an initial goal of restoring power to some parts of Monrovia by 26 July: Revitalizing the national strategy to fight HIV/AIDS, providing 5,000 bed nets in malaria endemic communities and medicinefor 300 new cases of tuberculosis; Rehabilitating water pipelines in parts of Monrovia and constructing 100 new water points and 52 new boreholes around the country; Initiating major reforms in the education sector, while undertaking major physical rehabilitation in a number of schools and government educational facilities; Initiating school curriculum review; Implementing data collection from all schools in the country; Drafting a new national youth policy with strategic areas of interventions relative t o youth development programs and activities: Launching a new girl's education policy: Increasing budgetary outlays for health (8.7 per cent) and education (8.6 per cent), far above previous levels and the largest share of outlays inthe budget. The government worked hard to ensure that these objectives were met as planned. However, these interventions fall far short of what is required to meet Liberia's needs and people's growing expectations. 7.3 The EmergingMedium-TermAgenda Inthe short term, the aim is to restore basic services to facilitate economic activities and combat poverty. Without adequate infrastructure, the ability t o reduce poverty is severely hindered and increases the likelihood of a return t o conflict. Reconstructing infrastructure will provide thousands of jobs for youth and will have substantial multiplier effects on the economy and poverty reduction, facilitating the delivery of health and education services. With this in mind, the government is committed to rebuilding infrastructure in collaboration with local authorities and communities, working closely with the international community and securing private sector participation in rebuilding efforts. Key goals being pursued by the Government of Liberia regarding infrastructureand basic services are detailed below. Rebuilding and refurbishing thepostalsystem and telecommunications The government is planning a comprehensive upgrading of the sector. The postal system will essentially require rebuilding and reforms. The Global System for Mobile Communication (GSM) sector is among the few experiencing competition equilibrium, expanding market coverage and declining prices with high positive effects on the overall economy. However, there is a need to rehabilitate the fixed line system, provide better oversight of existing GSM and put into place an enhanced regulatory framework. A telecommunications act currently being prepared will provide the regulatory environment and oversight for GSM operators. This act will be completed and passed in 2007. Restoring transportfacilities and services The main objective of the government in the medium term is to restore the road network through maintenance of paved roads, upgrading primary roads and rehabilitation of secondary and feeder roads. This is critical for getting agricultural outputs to market and for improved economic activities throughout the country. In addition, the government is planning t o rehabilitate air travel in Liberia and one of the first actions of the government was the establishment of the Liberia Civil Aviation Authority (LCAA) to facilitate development in the sector. Efforts to improve sea ports will be initiated and increased over the Interim Poverty Reduction Strategy (iPRS) period. Moreover, the government will be working on developing a vision and policy for the transport sector, including strategies to get private sector participation. Restoring electricity Rebuilding the power network is crucial for economic reconstruction and recovery. The immediate goals of the government are to continue t o aggressively pursue the process of facilitating private sector participation in the sector and rebuild the capacity of Liberia Electricity Corporation in order to restore power to major parts of Monrovia as well as some parts of the key economic centers around the country. Providing waterand sanitation In this sub-sector, the overall objective of the government is t o increase safe drinking water and improve sanitation (healthy environment) for all in urban and rural areas. The government and its partners will promote sustainable management of water and sanitation facilities and sensitize communities on hygiene promotion in an effort to ensure a reduction of waterborne diseases. The community management of water supply and sanitation services will also focus on employment creation and income generation. Key actions will include the re-establishment of the National Water Resources and Sanitation Board and development of a comprehensive institutional reform plan for the sector. Efforts will be made to provide water for industries so as to reduce stress on household drinking water supply. Likewise, water and sanitation management will be linked to achieving food security through priority actions, including: rejuvenation of the hydrologic monitoring network and re-establishment of rainfall and stream gauges in agro-ecological zones of the country; research on the national irrigation needs and the water management requirements in upland swamp cultivation; and development of a national policy and strategy. Furthermore, the development and implementation of an integrated water resource management and waste management policies, along with the accompanying enforcing legislation, will be a focus given the gaps inthe country's environmental management at the moment. Enhancing investmentin education to expand accessibility Education plays a central role in all developmental pursuits, including improved health awareness, human resource development, awareness of human rights, better participation in civic responsibilities, improved gender balance and productive capacity. Considering this, the plan of the government is to embark upon policies and enhance investments to improve access to as many children as possible, espyially from poorest families, and to provide skills development for adolescents and adults. 17 .The goals beyond the medium term are to increase pre-primary school coverage rates from 40 per cent to 80 per cent, increase from 30 per cent to 100per cent primary school lnetl enrolment rate and increasesecondary school transition rates from 50 per cent to 80 per cent by 2015 as well as improvements in post- school opportunities and adult literacy. A multi-faceted approach towards improving enrolment and keeping children in school will be devised. As a start, the government needs to increase access by providing new schools in population centers where none exist, reconstructing those damaged during the war and making school materials available to ensure teachers do not levy unofficial fees from parents. Another way of supporting school enrolment and attendance is through school feeding and addressing the gender gap and early drop-out rates of girls. The government is also committed to developing an information and communication technology policy for education and integrating information technologies into the educational system to enhance delivery and expand opportunities. Educating youth should also be shaped by a holistic approach not just ensuring literacy and skills, but exposing young people t o peace studies and civic education. Special attention must be given to implementing the new girl's education policy and ensuring equal opportunities for girls. High rates of illiteracy among women owing t o social, cultural, economic and conflict factors severely undermines the prospects for poverty reduction and therefore, must be addressed. The reconstruction and reopening of teacher training institutes is also important to ensure the training of a new generation of teachers and a steady supply of qualified personnel for the school system. To realize these goals, the government will pay attention t o mobilizing the needed investment to support a comprehensive education policy reform, curriculum review and development and in improving the strategic capacity of the educational administrative system through effective civil service reform. Local communities will also be called upon to play important roles in the provision of educational services, including volunteers and community contributions. The government will also pay attention to reform of the higher education sector to ensure appropriate human resources are developed to meet the needs of the nation. Strengthening health andnutrition delivery systems The provision of basic health and nutrition services is a major priority for the government. With assistance from its development partners, the Government of Liberia will strive to improve the health status of the population, especially the rural and urban poor. As a first step, it will formulate and disseminate its overarching national health and social welfare policy and plan. It will ensure that by December 2008, 70 per cent of all health facilities are providing an equitable, affordable and integrated basic package of health services to individuals and communities, with particular emphasis on reaching women and children, especially the poor and vulnerable. The government plans t o decentralize health systems planning and management to the county level t o more fully engage communities and local partners in the health development process. As such, it will strengthen the capacity of county health teams to plan and coordinate health services and improve and ensure the equitable distribution of health facilities by December 2008. The government will also strengthen financial management and procurement systems to international standards by November 2007 and reconstitute and implement the National AIDS Commission (NAC)by June 2007. Other major priority areas include: Building the human capacities of health workers and health managers; Ensuring a financially sustainable primary health care system; Re-establishing an efficient health referral system; Reducing maternal, infant and under-five mortality rates; Reducing malnutrition among infants, childrenand pregnant/lactating mothers; Sustaining immunization rates at 80 per cent; Implementing strong programs to fight malaria, tuberculosis and HIV/AIDS (see box); e Establishing early warning systems for epidemic response and disease control; e Develop national social welfare policy and plan. 18 Source: Liberia'sproposal to the Global Fund. - Community-driven developmentprogram One of the government's key strategies for building small infrastructure, strengthening schools and clinics and developing stronger youth programs is through community-driven development programs in which local communities and counties are given grants to address their own highest-priority issues. Several programs are already under way in cooperation with major partners and non-governmental organizations (NGOs), and the government is adding to these efforts through its 15 County Plan (previously known as the 100 Villages Plan). These programs need to be strengthened and extended to ensure more vital services are delivered at the local level. 7.4 The InterimPoverty ReductionStrategy Agenda During the iPRS period, emphasis under Pillar IV - rehabilitating infrastructure and basic social services - is placed on improving livelihoods and service delivery for all. Table 7.1 presentsthe planned interventions. ~ v, 3 a ?I I r 4 9 z E r m 5c e .-+- 0 L W J3 U .o a m u E -$ 2 > om +-I- w c m wn m a.s 5p 0 .e5 bk m O S I I I I I . c 0 5) 2 Y c 0 PART THREE IMPLEMENTING THE STRATEGY AND FULL POVERTY REDUCTION STRATEGY PAPER ROAD MAP CHAPTER EIGHT Implementingthe Strategy "Formulating the strategy is an essential step for reviving hopes, but implementing the strategy forresults is what willuplift thepoor frompoverty.20" 8.1 Introduction Although the poverty crisis and many of the other development problems predate the war, the realities of Liberia as a post-conflict nation pose tremendous challenges for the formulation and implementation of anti-poverty measures. The capacity crisis and the unemployment problem underscore the intricate nature of the challenge. To add meaning and turn the hopes of Liberians into reality, it is important to have the necessary political will, build strategic partnerships, establish robust monitoring and evaluation procedures and ensure that implementation risks are identified and appropriate measures taken to minimize them. These issues, together with a strategic management framework regarding the implementation of the Interim Poverty Reduction Strategy (iPRS),are highlighted inthis chapter. 8.2 Manifesting Strong PoliticalWill Demonstrated credible intent of politicians at all levels and a commitment t o carrying out an agenda with all the resources at the disposal of the nation is a precondition for the successful implementation of the strategy. Without such a commitment, the articulated strategy shall be ineffective. Fortunately, a key strength of the new Liberia is demonstrated political will at the highest leadership level, demonstrated in the initial 10 months of its program implementation, including an aggressive fight against corruption, mismanagement of public resources and bogus concession agreements (Box 9.1). The enhanced performance in financial management and improved control of public finances has already reduced graft and improved the budget of the government. The Government of Liberia intends to continue building on this strength during the iPRS period and beyond. 20 Dr. Toga Gayawsa McIntosh - 21 . A quote from the inaugural speech of President Ellen Johnson Sirleaf, 16 January 2006. The president has put the policy into practice by paying taxes and reporting on travel expenditures. Efforts will be made to generate the required political will in all branches of government and at all levels, and leadership across various arms of the government will be held accountable. A key focus will bethe continuation of actions against corruption. 8.3 ForgingConstructive and Strategic Partnerships As profiled in earlier chapters, the poverty challenge faced by Liberia is so daunting and the needs so massive - that the Government of Liberia would be unable to satisfactorily respond on its own. There is a critical need to build strong strategic partnerships and the government is committed t o engaging all actors, domestic and foreign, in order t o enlist support for the design and implementation of the poverty reduction strategy and an overall development agenda. The government, development partners and non-governmental organizations (NGOs) will, however, need to better coordinate interventions and actions and the Liberia Reconstruction and Development Committee (LRDC)framework will provide a useful platform for doing so. 8.3.1 Engaging DomesticActors The first point of call for any positive engagement in the fight against poverty is local actors -nonationcanoutsource itsdevelopment. Liberians at homeandabroad will havetotake the lead in getting its nation and people out of poverty. The government is committed to building a 'network government' in which the private sector and civil society organizations are active participants, with each sector playing the role for which it is best suited.22The ultimate goal of the government is not just to solicit inputs in developing policies, strategies and programs, but also engage civil society in implementation, with the aim of empowering civil society and its organizations t o become active partners in fostering growth and creating employment opportunities. This strategic approach is important because civil society provides a natural ally for the government in fighting poverty. Liberian NGOs and charitable organizations have always played a significant role in meeting the needs of the poor. For example, during the war years and under very difficult circumstances, civil society organizations provided the needed humanitarian and basic services when the government was essentially not functioning. Their knowledge of the terrain and their proximity t o the population is extremely useful in the design and implementationof anti-poverty strategies. To complement efforts of the government, youth groups, traditional leaders, local opinion leaders, the business community and women in the informal sector will be mobilized to help 22. As outlined in chapter 4, civil society was actively engaged in the preparation of this iPRS through forums organized in Monrovia and in all counties around the country. despite a limited time frame. This will be deepened during the preparation of the full poverqreductionstrategy. implement the poverty reduction strategy, taken t o the people through various methods. In certain cases, domestic actors will have a leadership role t o play in the design and management of direct interventions t o reduce poverty, particularly in areas such as micro-credit ventures and in mobilizing community actions t o repair and build local basic socio-economic infrastructure. They will also have a role to play in advocacy initiatives dealing with issues such as improving gender balance in education and job acquisition, or in changing mindsets t o improve opportunities for women and girls. Similarly, local businesses and firms will have a significant role t o play in the strategy t o reduce poverty through investments in various parts of the country. Ingenuity and innovative capacity must be harnessed to facilitate substantial poverty reduction. 8.3.2 EngagingExternalActors A multitude of external partners is present in Liberia consisting of bilateral and multilateral agencies, international financial institutions, United Nations agencies and international NGOs. The United Nations sector is represented by 13 agencies: the Food and Agriculture Organization of the United Nations, the United Nations Development program, the United Nations Environment program, the United Nations Educational, Scientific and Cultural Organization, the United Nations Population Fund, the United Nations Human Settlement program, the United Nations High Commissioner for Human Rights, the United Nations High Commissioner for Refugees, the United Nations Children's Fund, the United Nations Development Fund for Women, the United Nations Office for Project Services, the World Food program and the World Health Organization. The African Development Bank, European Commission, the Department for International Development of the United Kingdom, International Monetary Fund, International Organization for Migration and the World Bank are also active. Among bilateral partners are China, Denmark, Germany, Ghana, Ireland, Japan, Nigeria, Norway, South Africa, Sweden, the United Kingdom and the United States. The African Union and the Economic Community of West African States are also represented in Monrovia and play an active role inthe reconstructionexercise. There are more than 320 international NGOs working on social sector programs and the support of partners collectively has been instrumentalinthe progress made since the end of the war. The government appreciates this concerted support and would like to continue harnessing it for the recovery, reconstruction and development process of post-conflict Liberia. The government will continue to place emphasis on improving donor support, coordination and harmonization. An effective development assistance database will be created as a first step for the establishment of a platform and mechanism for better coordination, harmonization and effectiveness of donor support in Liberia under the leadership of the government. The aim is to increasingly anchor dialogue and coordination with the donor community on two themes: 1) governmental strategies and policy priorities, and 2) the budget process and institutions and effective aid delivery. To that end, the government intends to deepen work with its partners to strengthen the aid coordination efforts of the four LRDC pillars as well as on the LRDC secretariat. Special attention will be given to bolstering the aid coordination, monitoring and evaluation capacities within the Ministry of Planning and Economic Affairs. Simultaneously, the government will sustain dialogue with international partners to work on measures that should, over time, lead to significant reductions and ultimately the cancellation of debt under the Highly Indebted Poor Countries and multilateral debt relief initiatives. The government is committed to continuing to build the track record necessary for acceleratingthat process. To protect resources for development, it will be important to ensure that financing of debt relief is in addition to resources made available t o Liberia by donors. 8.4 Effective Mobilization and Utilizationof Resources The financial and human requirements to combat poverty and to support recovery and reconstruction efforts in Liberia are enormous. A t the same time, a certain degree of 'wait and see' persists on the part of many donors, based on widespread misuse of both government and external assistance in the past. The same can be said of many potential investors, mainly due to poor infrastructure and security concerns. Key challenges include creating an environment of trust with donors and international partners, consolidating peace and updating basic infrastructure. The government is focused on engendering this trust: it is engaging partners in policy dialogue, building confidence in the prudent use of donor resources and working hard to address the waste and corruption of the past. Additionally, the government is working with partners to build institutional and professionalcapabilities to effectively manage and absorb donor resources. Mobilizing more resources from within is also a key element of the governmental strategy. This includes more effective management of public resources and stimulating the private sector to generate additional resources for development. Putting in place a sound macroeconomic policy environment and addressing critical infrastructural constraints and structural policy weaknesses will be critical. Attracting investors will require a focus on local investors, Liberians in the diaspora and foreign direct investment. The ultimate aim of the government is to move toward as much direct budget support from donors as possible in order to strengthen national ownership and managementof the budget and poverty reduction strategy implementationprocess. Recognizing that strengthening the fiduciary framework and developing the capacity requiredfor this is still under way, funding arrangements should be as simplified and harmonized as possible, in accordance with the principles of the Paris Declaration on Aid Effectiveness. The government thus supports the streamlining of existing funding mechanisms to include a range of development partners in support of the poverty reduction strategy implementation. This would ideally be through a multi-donorfinancing mechanism. 8.5 Monitoringand Evaluatingthe Strategy implementationProcess A participatory mechanism will be established to monitor implementation, evaluate progress and measure the impact of the strategy. The monitoring and evaluation process will include an assessment of improvements in program delivery, using both quantitative and qualitative indicators that will be designed by the LRDC secretariat in consultation with key actors. Additionally, it will measure effectiveness in the use of public resources allocated t o poverty reduction. Each agency charged with the responsibility of executing one or more of the interventions shall report quarterly to the LRDC using an activity tracking questionnaire. The main objective is to provide policy makers, implementing agencies, beneficiariesand other stakeholders with timely and accurate information on progress made and pending constraints. The monitoring and evaluation process will be linked with a program to enhance the capacity for statistical data collection and analysis. The details of the monitoring and evaluation architecture will be further developed during the iPRS period, building on best practices from other countries, bearing in mind the post-conflict institutional challenges of Liberia. The findings of the monitoring and evaluation process will be utilized by the Government to better tailor the design and implementation of the full poverty reduction strategy. 8.6 Managing PotentialRisks The Government of Liberia is committed to doing everything within its power t o combat poverty. There are, however, a number of risks that could frustrate this level of commitment and derail strategy execution. Possible significant risks include shortfalls in financing, re-emergence of conflict, limited leadership and administrative and technical capacities. While these risks are real, they are less likely t o derail the level of commitment the government has attached to achieving the goals of reducing poverty in Liberia in its medium t o longer-term development agenda. 8.6.1 Finance The core challenge is finance. Liberia's financial resources after a quarter of a century of mismanagement and economic decline are very limited. Assembling quality human capital, strengthening broken down institutional capacities and creating adequate short- term public sector-led job creation will require a massive amount of money. The government will do what it can t o engender trust within and outside of Liberia to fill the financial gap. The hope is that efforts by the government in prudent financial management will engender support, both inside and outside the country, and that donor partners will continue to support Liberia. In conjunction with doing things right internally, the government will continue to engage the donor community and position itself for targeted assistance and increased support. By effectively demonstrating that waste and corruption are no longer the norm in Liberia, the government hopes to be able to raise the necessary financial resources from donor partners and domestic actors to formulate and implementthe anti-poverty strategy. 8.6.2 Peace andSecurity A second challenge requires continued commitment to peace and security on the part of the various actors in and around Liberia. Both are linked and interrelated and are critical t o success. Large numbers of unemployed youth increase the risk of them being used to refuel conflict. The government is also aware of the risk associated with a lack of commitment and engagement of stakeholders. The faster the strategy is implemented, the greater the chances for minimizing the risk of slipping back into conflict. In addition to implementing the measures contained in the strategy, the government is engaging and will continue t o engage the public and civil society organizations in managing the development process. The government intends to continue to be fully open, transparent and accountable. Objectives are to ensure public support for government programs, build trust and minimizethe threat of a return to conflict. Positive engagement will minimize this risk. Additionally, the encouraging impact of improved economic management, elimination of waste and corruption, poverty reduction and employment creation and a commitment to democratic principles will go a long way in engenderingthe trust and commitment of Liberians to peace and development. 8.6.3 Capacity Another significant risk to the implementation of the strategy is a lack of capacity. The government may receive financing and have the commitment of the people, but without adequate capacity to design and implement robust poverty reduction programs, success will not be assured. A major effort to be continued is welcoming back competent Liberians who left as a result of the war in order t o participate in the reconstruction and development process. Hopefully, the ongoing Transfer of Knowledge Through Expatriate Nationals (TOKTEN) program and the Liberian emergency capacity-building projects will benefit from further support from other partners as well as the anticipated senior executive service program for senior civil servant professionals. Technical assistance shall be used strategically when necessaryto fill the capacity gap and meet established deliverables. However, the backbone of the capacity will continue to be the civil servants and others who remained inside the country during the war years. Their role in Liberia's recovery is crucial. As such, key efforts will have to be undertaken t o provide support and training and to nurture their skills. Civil service reform will also nurture an environment in which skills can be developed and utilized. Medium to long term efforts will support the rebuilding of educational institutions t o ensure new capacity formation. The government will be working with schools and universities, both private and public, to ensure that training programs respondt o the needs of the country and to provide support where possible. 8.6.4 Adverse RegionalContagion The history of conflict and turmoil over the past t w o decades is well established inthe West African sub-region. Yet today, Liberia enjoys extraordinary goodwill, regionally and in the international community, and the fervent desire of the Liberian people for sustained peace is proven. Regional institutional structures are likely t o mitigate the risks of a relapse into conflict over the medium term, however the goodwill that exists must be consolidated. 8.7 Strengthening the Implementation Arrangements The strategy implementation mechanism will be situated within the LRDC structures and includes a coordination structure composed of the MPEA, the Ministry of Finance (MoF), Ministry of Defense, Ministry of Public Works and the LRDC secretariat. A technical committee, made up of professional staff from the United Nations Country Team, MPEA, MoF, the Liberian Institute for Statistics and Geo-Information Systems (LISGIS) and NGOs, will support LRDC. The four LRDC pillars will assume responsibility for monitoring implementation in their respective areas, supported by MPEA, MoF and LRDC secretariat. The cabinet and LRDC, chaired by the president, will provide general direction on the implementation of the strategy. 8.8 Conclusion The formulation of a well focused strategy is necessary, but is not a sufficient prerequisite to derive the desired results; the implementation of the iPRS is not without risks. Other ingredients, such as political will, collaboration and adequate resources, are crucial for success. Fortunately the government understands these risks and is formulating appropriate responses t o mitigate them in order to ensure successful formulation and implementation of the strategy to combat poverty in Liberia. The successful implementation of the iPRS can only modestly impact the poverty situation. For sustaining peace and enhancing development, the strategy needs to be extended beyond the iPRS period and the government is committed to developing a Millennium Development Goal-based poverty reduction strategy for the first five years after the end of the iPRS period. CHAPTER NINE Indicative Road Map to the Medium-Term Poverty Reduction Strategy 9.1 Introduction The preparation of the Millennium Development Goal-based Poverty Reduction Strategy 2008-2012 (PRS) will be undertaken in the same spirit as the Interim Poverty Reduction Strategy (iPRS). The major differences will be the depth and extent of the process and the length of the implementation period. A lack of up-to-date socio-economic data and information was a critical limiting factor in the preparation of the iPRS and significant efforts will be made to remedy this in preparing the full PRS. The participatory process will also be improved. Sectoral and sub-sectoral diagnostics and strategies will be initiated and later completed. In addition, the institutional framework utilized for the preparation of the interim poverty strategy will be strengthened and the Poverty Reduction Strategy Paper (PRSP)will present a fully developed monitoring framework. 9.2 Confrontingthe Dataand Information Crisis Availability of timely information and data is a challenge. The preparation of a full PRS necessitates the availability of information on poverty, which is currently lacking in Liberia. Most of the available socio-economic information and data predatesthe war and the last major poverty profile was prepared in 2001, while the last population and housing census was conducted in 1984, and the most recent Liberian demographic and health survey (LDHS) was in 1999-2000. The government and its donors realize this risk and efforts are under way to improvethe information and database. A key improvement in graduating from the iPRS to the full PRS will be availability of statistical data. The full PRS will involve in-depth research and surveys on key issues to ensure that adequate data and information is obtained and analyzed in drawing conclusions on identifying the poor, locating them, understanding their expectations and developing appropriate strategies and programs that are most effective in addressing poverty. In addition, more needs to be known about the economy, especially at the macroeconomic and sectoral levels, to uncover the structural challenges that need to be overcome. Since January 2006, the Liberian Institute for Statistics and Geo-Information Systems (LISGIS) has been conducting the 2006-2007 LDHS. When completed in June 2007, the LDHS will provide key indicators on child labor, maternal and infant mortality, fertility rates and, for the first time, information on HIV/AIDS by sex. The government has also developed a roadmap for the 2008 population and housing census.23During the iPRS period, the census team will undertake a number of activities including resource mobilization, pilot census mapping, exhaustive national data collection and analysis as well as non-income poverty mapping. A core welfare indicators survey, with a consumption module, will also be undertaken. Sectoral strategies in health and education and in potential growth sectors such as agriculture, mining and forestry will also be deepened in advance of the full PRS. 9.3 Deepeningthe ParticipatoryProcess The LRDC process and the preparationof the iPRS has provided Liberia the experience in organizing consultations and getting stakeholders involved in national decision making 23 The last nationalpopulation and housingcensus was conductedover 20 years ago. - in a new democratic era. The preparation and implementation of the full PRS will deepen this process and provide an ongoing platform for nationwide consultation. As described in chapter 3, consultations were held throughout the counties using the administrative structure of the county development superintendents during the preparation of the iPRS. This process will be refined and utilized to facilitate consultations in the preparationof the full national development and poverty reduction strategy and other follow up strategies which will address the issue of socio-economic transformation in Liberia. This consultative platform will also be relied uponfor monitoring and evaluation. The government wants to maintain dialogue, making it an ongoing exercise for continuous review, updating and engagement of the public in national decision making, especially with respect to combating poverty. As part of the preparation of the full PRS, ongoing public consultations and dialogue will be organized using focus group discussions. The support and engagement of the development superintendents will be encouraged to ensure that the participation in the preparationof the PRStakes place around the country. The aim is to build consensus and a longer-term vision for the nation, not only on the poverty reduction strategy but other aspects of national development, which will take the nation beyond managing poverty to rapid growth and development. Focus group discussions will target stakeholders, beneficiaries, community and opinion leaders, civil society representatives, displaced communities, government workers, professional organizations, university, religious bodies, parliamentarians, youth and women organizations, county officials and non-governmental organizations (NGOs). Targeted focus group discussions will be held regularly. In addition, participatory research and surveys on the poverty situation in the country will also be undertaken in conjunction with other national institutions, such as universities and churches. The outputs of the research will be widely disseminated through regular publications as well as policy and learning dialogues that will bring together policy makers, parliamentarians, NGOs, local government officials and experts t o discuss research results and their policy implications. 9.4 Strengtheningthe Institutional Framework The institutional framework utilized in the preparation of the iPRS worked well and facilitated the engagement of many actors, including the government, civil society organizations and international development partners. This will be continued in the preparation of the full PRSP. However, considerable efforts will be made t o forge stronger links t o the LRDC pillar working groups to ensure that their knowledge of the sectors is fully exploited and integrated. Additionally, within the current framework, a full time team of four experts will be recruited to manage the day-to-day aspects of the preparation of the full PRS. 9.5 The Expected Milestones The core activities envisioned from now until the finalization of the full PRSP are presented inthe table below. Table 9.1:Indicative Milestones to Full Poverty Reduction Strategy hctivity 3esponsibiliiy Timeframe %SP preparatory project formulation and Ministry of Planning and January 2007 ksign Economic Affairs (MPEA), LRDC secretariat. Ministrv of Finance (MoFl 'inal PRSP project approval LRDC and cabinet Feb 2007 Submission to partners with funding requests MPEA Feb 2007 nstitutional set-up MPEA and LRDC March 2007 Recruitment of Technical team Purchase needed equipment 3egin PRS preparation LRDC, MPEA, project team February 2007 Millennium Development Goal Training and LISGIS, MPEA, United July 2006 - March 2007 4ssessment Nations Conduct associated surveys LISGIS, United Nations, June2006-June 2008 Core welfare indicator questionnaire donors Liberia demography and health survey Population and housing census Consultative and participatory process Consultation with NGOs and civil society Consultation with political leaders Technical team, pillar January - June 2007 County and regional consultations working groups, National consultations development rn Consultation with government officials superintendents, and county development consultants superintendents Stakeholder technical workshops Radio, TV and media discussions on PRS . Technical national review of draft PRS Participatory data collection Perception of poor of poverty Impacts of existing programmes Strategy to reduce poverty Technical team, pillar Indicators for monitoring and working groups, evaluation development Skills and entrepreneurial development superintendents,, February -July 2007 programmes consultants Small and medium enterprises and United Nations access to credit and business support Development Fund for Empowering women and youth Women (UNIFEMI Budget tracking and review Public expenditure reviews Diagnostic policy reviews and sector studies Key sectors diagnostic studies Policy review studies February- April 2007 Macroeconomic study Consultants Employment strategy study Costing of programs Drafting and review of full PRS Drafting Subject to technical review MPEA, Technical Team and July- October 2007 Editing Consultants Presentation and submission to cabinet Finalization, design and publication Dissemination and feedback Presentation to Donors MPEA, MoF and LRDC November 2007 Discussion and feedback Economic Intelligence Unit (EIU) data base, 2006 FA0 and WFP, Liberia Crop and Food Security Assessment, 2006 FlAS Mission Report-March 2006 Fearon, James D., and David Laitin, "Ethnicity, Insurgency and Civil War," American PoliticalScienceReview, 97 (11: 75-91, 2003 Government of Liberia, Statement of Policy Intent for the Agriculture Sector and Action Plan, Ministry of Agriculture, 2006 Government of Liberia, National Budget of the Government of Liberia, Bureau of the Budget, 2004,2005 and 2006 Government of Liberia in collaboration with FAO, HIC, UNICEF, UNMIL, WFP, WHO, CRS, World Vision, GTZ & LINNK: Comprehensive Food Security and Nutrition Survey, Monrovia, October 2006 Government of Liberia, 150-DayAction Plan, January 2006 Government of Liberia, United Nations and World Bank, Joint Needs Assessment, February 2004 Government of Liberia and UNDP Liberia, Millennium Development Goal Report Liberia, 2004 Government of Liberia, Accra Comprehensive Peace Agreement, August 2003 Government Reform Commission, National Anti-corruption Strategy of Liberia (Draft), 2006. Humphreys, Macartan and Paul Richards, 'Prospects and Opportunities for Achieving the MDGs in Post-Conflict Countries: A Case Study of Sierra Leone and Liberia,' CGSD WorkingPaperNo 27, October 2005 [Availableon: http://www .earthinstitute.columbia.edu/cgsd/documents/HumphreysRichards.pdfl IMF Liberia Article IV Staff Monitored Program, IMF Country Report No. 061'166, May 2006 MoE, Educational Statistics, 2000/2001 MoE, Liberia Educational Statistics, 1999 MoH&SW and WHO Report on Safe Motherhood Needs Assessment, 1999/2000 MPEA, National Accounts estimated figures by the Government of Liberia and the IMF, Ministry of Planning and Economic Affairs, 1999 2 3 . The last nationalpopulationand housing census was conducted over 20years ago. MPEA, Statistical Bulletin of Liberia, 1989 MPEA and UNDP Assessment for the Development of the National Statistical System in Liberia Final Report, 2001 MPEA and UN-HABITAT, Rapid Urban Sector Profilingfor Sustainability Study, 2006 MPEA and UN-HABITAT, Program for Settlement and Shelter Rehabilitation, 2006 MPEA, University of Liberia and UNFPA, Liberia Demographic and Health Survey 1999/2000 Sawyer, Amos, Beyond Plunder: TowardDemocratic Governancein Liberia, Lynne Reinner: USA, 2005 Sawyer, Amos, TheEmergence of Autocracy in Liberia: Tragedy and Challenge. ICs Press, San Francisco, California, 1992 United Nations, Common Country Assessment Liberia, Consolidating Peace and National Recovery for SustainableDevelopment, Monrovia, June 2006 United Nations, Investing in Development, Millennium Development Project Report, 17 January 2005 UNDP Liberia, National Human Development Report 2006 - Mobilizing Capacity for Reconstruction and Development, August 2006 UNDP Liberia, Poverty Profileof Liberia, January 2001 UNDP Liberia, Liberia Economic Review, 1999-2001 UNMIL/ESC 2006; WFP, WorldHunger Series, 2006 World Bank, [study on causes of conflict], 2005 World Bank, A Roadmap for the Development of a National Strategy for Statistical Development in Liberia - Short TermActions and StrategicDirections, Second Draft. World Bank GDDS Support to Liberia, April 2006. World Bank, Building Effective States, Forging EngagedSocieties, Washington DC, 2005 World Bank and UNDP, "Community Cohesion in Liberia, A Post-War Rapid Social Assessment",Social Development Papers Conflict Prevention and Reconstruction Paper No. 27,January 2005 ANNEX I CONCERNS FROM THE COUNTIES ON POVERTY IN LIBERIA PILLAR 1: SECURITY :ornmon Concerns 3omi Bong Gbarpolu x-combatants 4rms Arms lmmlgration Extend rehabilitation and Empower local authorities -Sensitize community on the . Deploy immigration reintegration programmes to to retrieve hidden arms United Nations personnel to man border remote areas, provide from people Development Programme posts vocational training, create policy on small arms employment opportunities >rugs collection facilities and form farmer Sentence drug dealers to .Correctional Build correction centres cooperatives imprisonment Crime Establish centres to halt . Establish regular informatior Iberia National Police drug abuse, especially sharing practices between Recruit and train more amongst children security personnel and police officers, depioy to community members counties, work to improve image of the police in Liberia, settle salary arrears, pay regularly Police infrastructure to be improved iecurity sector Retain and retrain personnel who meet criteria set for enlistment. ensure recruits are taken from the township/village level 4tmed Forces of Liberia Recruit qualified individuals, have a well trained and professional army, offer benefits to retired personnel .ofa Margibi Maryland Montserrado Security Peacebuilding Peace end reconciliation :rime Make rule of law classes . Foster reconciliation . Involve all community , Citizens and local leaders mandatory for security through the Truth and members in the activities of assist in the identification of officers Reconciliation Commission the TRC the sources of drugs (TRCI mmigration Youth mmigration Strengthened border posts Border - include youth in the Strengthen border and Merge National Security . Stop the entry of iliegalisub- development process migration point patrols Agency and NBI standard drugs .Resourcesexploitation Control of natural resources -Refugees/Returneas Facilitate return and resettlement PILLAR 1: SECURITY 3rand Bassa Brand Cape Mount irand Gedeh Grand Kru iecurity 4rms irms ather Prevent the unemployed Introduce arms for Register all hunting guns ,United Nations Mission in from being recruited by development programme with local authorities Liberia (UNMIL) needs to unscrupulous groups carry out regular patrols in Zommunity Security .raffic ail accessible districts :rime Eradicate ghettos Ensure motor vehicles are Launch campaign to registered with Liberia discourage rape charges National Police being used as means of extortion Uimba River Cess 3iver Gee Sinoe 'eace and reconciliation Crime noted in common concerns) security sector Settle property and land ' Enforce laws on firearms Enhance security in natural disputes in Nimba as possession and armed resources areas in the quickly as possible robbery county hvironment and natural :oastguard esources - Reactivate coastguard Regulate the burning of charcoal and uncontrolied cutting of timber Ensure proper use of natural resources qefugeesl Returnees improve health and education services >ommon Concerns Bomi Bong Gbarpolu iovernance Education Education Education Counties want to: elect Set up community task .-Subsidize private schools Revise school curriculum to local officials; improve force to make sure parents Enact iaw forcing all parents meet present day reality coordination between line send children (especially to sponsor their children to ministries and agencies of girls) to school primary schools Uining government; a national - Avoid awarding mining training policy for civil Rule of Law Rule of law contracts prior to lifting of servants; ensure Revise the Liberian . Strengthen the judicial sanctions transparency and constitution system accountability and Teach civic education in . Establish code of conduct decentralization of revenue schools Corruption - Closely for public servants monitor the use of money Traditional authority for development in the -Work out how traditional county and national authorities can complement each other .oh Margibi Maryland Montserrado 3vil society Taxes Rule of law ?de of law Encourage private .Levy more taxes on rubber . Rationalize the two levels of Make sure laws are investments justice (traditional and enforced Uphold press freedom . formal) Abolish trial by ordeal iducation tule of Law Poor representation of line Show respect for all cultural ministries outside of caDital norms Build institutional canacities %and Bassa Grand Cape Mount hand Gedeh Grand Kru lule of law W e of law lule of law of law Acknowledge the great lack Strengthen judiciary Lack of defense counsels in -RuleEducate citizens on use of of integrity in the court Construct and rehabilitate the county the court system systems and the perception correctional facilities Enforce ban on sassy wood that human rights are not protected Education h d e r -Education Pay teachers regularly so Decentralize education and Ensure gender equity and that they can remain in :orruption ensure that county gets involve women in the classrooms Punish corrupt officiais polytechnic or university decision making process Extend video census board ~ to Grand Kru hltural issues Health Distinguish between Reintroduce cost recovery traditional and moral issues or revolving funds -Roads Provide equipment for road Provide regular maintenance and workshopsiradio shows on Non-governmental construction law in local vernacular organizations . Review the accreditation of non-governmental -Ethnlcity Establish a peace and organizations (NGOsl reconciliation committee to settle ethnic disputes Uimba River Cess liver Gee Sinoe :orrections facilities Coordination oca1 authority Establish corrections . Staff of all line ministries Review political sub-division -Education Increase *rural facilities in ail districts and must be properly identified boundaries - Revise criteria compensation' for teachers at the county headquarters for political sub-divisions working in the counties Rule of law :ounty administration . Construct / renovate Create a special budget for courthouse, correction -Property Address squatters' rights local authorities centre and police station and the selling and reselling of land Xstrict development Education :ommittees . Provide library and Involve district development laboratory facilities -Urban-Rural if (at all) people Investigate committees in planning of . Establish more educational can be encouraged to 'go rehabilitation and institutions back' from Monrovia developmental activities Judiciary systems -Other The 'emergency' state of Deploy more legal staff in mind of international NGOs the county sidelines communities, national NGOs and the line :lvll servants ministries Encourage civil servants who are still in Monrovia to come back to the county Zommon Concerns Bomi Bong Gbarpolu Banking . Establish commercial banks -Banking Banking Establish branches in rural . Establish banking system in the county communities countrywide Industry . Compel all international -Economic procedures in empowerment Taxes Simplify . Promote decentralization of industries working in Liberia Ministry of Finance revenue collection and to manufacture their disbursement products in Liberia Tax collection - Broaden tax net to include Sanctions Price levels informal sector . Promote lifting of sanctions . Establishfood storage on timber and diamonds facilities in the county to Unemployment counteract shortages . Private sector should hire Natural resources locally . Conduct monitoring of exploitation Transportation - Introduce mass transit Lofa Margibi Maryland blontserrado 4grlculture Banking nfrastructure Rehabilitate and improve . Government must ensure -Bankingsystem Put in place that Rehabilitate the water and agricultural institutions that bankers pay back encourages people asking electricity stations Revitalize the Liberian depositors' money for loans Produce Marketing raxes Company Price control Improve revenue collection Encourage skillslvocational . There should be price tags -Employment key Revitalize sectors of the and disbursement systems training on all goods sold in Liberia economy Provide credit schemes for - Bring concession areas back :ood farmers up to former productivity Promote household food levels security Market pollcy Provide duty free to building and construction materials -Agricultureagriculture Provide tools and seeds to vulnerable community members Transport costs - Bring down transport costs by having a fuel station in the county hand Bassa Grand Cape Mount Grand Gedeh Grand Kru kwelopment iconomlc empowerment International community iconornlc empowerment Desist from previous Redeploy bureau of ' Organize workshops to Citizens must get involved practices of asking for huge cooperatives to organize show people how to gain in more self-help projects sums of money upfront cooperatives access to resources from investors lenking Employment Provide market incentives Develop a Ministry of Labor through local county banks (MOL)databank of qualified Give banking education in citizens both English and local vernacular Mining Extend Kimberly Process rexes Certification Scheme of Set up database to increase forming mining cooperatives revenue Rgriculture . Provide tools and seeds to farmers Uimba River Cess River Gee Sinoe tanking Banking Uatural resources Open a branch of central . Restore confidence in the Establish county natural bank Economic banking system resources committee to empowerment oversee management of Encourage self help and Economic empowerment natural resources lie. illegal income generation activities. Establishaloan scheme for mining, concessions, etc.) small business - Direct Protect the Sapo National liamonds investment activities to Park to develop as an eco- Help lift the ban on enhance employment tourist asset for the county; diamonds to create opportunities Involve communities in park employment . Government to establish a extension and develop Price Control Board programmes for peripheral rradelcornrnerce communities Improve trade and commerce with nfrastructure neighbouring countries Prioritize the rehabilitation of the Port to Greenville Zomrnon Concerns iealthcare Water and sanitation Introduce hygiene education - Construct more hand pumps in schools, rehabilitate, build and equip health facilities, train adequate -Roads Maintain feeder and farm to health personnel and market roads provide incentives Zducation Improve teachers' salary, medical and housing facilities Decentralize universities, vocational and technical schools ' Address the high illiteracy level Vlargibi Montserrado iealth Water and sanitation Provide additional doctors - Revitalization of the White and drugs in the health Plains water plant and the centres Harrisburg hydro plant idministratlve Create office space for Io -Roads Rehabilitate roads officials -Agriculture Absence of government agriculture extension staff ,rand Bassa later and sanitation Curtail the theft of hand ntinue emergency pumps at night -feeding Buildings Rebuild commissioners' and rbanhral paramount chiefs' Introduce and encourage a village re-grouping program for development efforts to be directed easily truct health facilities in ays connecting :ornrnunication Extend cell phone services and revitalize the postal - Regulate drugstores and system into the county Urban planning .Rehabilitate market facilities in Greenville and other ANNEX 2 CONFRONTING THE NATIONAL CAPACITY CRISIS A2.1 Introduction Implementation of the four strategic pillars of the Interim Poverty Reduction Strategy will undoubtedly experience a number of operational challenges. Key among these challenges is the pervasively fragile capacity in virtually every sphere of Liberian activity (Box A2.1). This annex explores the background to, and characteristics of, the current capacity crisis of Liberia, assessing the cross-cutting impact on implementation of the emerging poverty reduction strategy. A2.2 Dimensionsof the Capacity Crisisof Liberia The weak capacity endowments of Liberia have manifested themselves in many ways over the years. This frailty has undoubtedly been exacerbated by violent conflict and associated adverse effects. Capacity has been consistently weak in the public, private and civil society sectors. A2.2.1 PublicSector Capacity In the public sector, Liberia's severe capacity deficit has largely been driven by the nation's increasingly parlous budgetary situation for several years. For most of this period, less than 10 per cent of the national budget has been devoted to education, training, health, agriculture and rural development combined. Compensation is shockingly low and in the past was often in arrears by several months. In addition, the overall acute poverty situation, with some 80 per cent of the nation living on less than 1 United States Dollar (USD)per day, has rendered any systematic capacity deepening and/or human development virtually impossible. Current public sector capacity inadequacies are largely evident by the: Severeskills shortage: All critical skills are pervasively in short supply at executive, middle management, technical and lower operational levels stemming essentially from the sustained low level of human development. lnfrastructural and technical inadequacies: There has been substantial loss of manpower and socio-economic infrastructure needed to support nation building, partly on account of the massive brain drain. Crisis-related death and destruction of infrastructure have also resulted in insufficient and unreliable technical information essential for decision making, policy analysis and formulation. Weakgovernance: Sustained poor governance and economic mismanagement inthe public sector has been evident for many years. Morale is poor, work ethics questionableand difficult to enforce. Institutional deficits: There is pervasive evidence of severely damaged institutional capacity, with most institutions lacking essential tools, logistics and supplies and basic information technology infrastructure and systems. They are also confronted with very poor physical working conditions including the absence of reliable power supply, water and telecommunication services. Inhospitable environment: The broader environment within which public sector institutions function is characterized by corruption and low social capital, which were underpinnedby serious credibility problems on the part of past governments. A2.2.2 PrivateSector Capacity Although the private sector has also been impacted by brain drain and a lack of investment since the 1980s, a substantial level of private sector technical capacity still exists in Liberia. However, utilizing existing private sector capacity is partly constrained by a historical culture somewhat unfriendly t o employing national consultants/advisors. In addition, private sector professional and regulatory ethics have severely eroded in years, presenting major issues in corporate governance. Much needs to be done by self regulating private sector professional bodies, as well as by the public sector itself, in providing and deepening the space and partnerships to ensure more broad-based investments in private capacity formation. A2.2.3 Civil Society Capacity For many of the same reasons, civil society capacity structures are not strong. The press, though improving, still exhibits problems of quality and professionalism. Trade unionism is erratic and at times disorganized. The non-governmental organization (NGO) sector lacks coordination and adequate oversight, though it has done a credible humanitarianjob in often difficult circumstances over the years. Although adequately funded, most international NGOs have tended not to build sustainable local capacity in their operations, often with much of their leadership being foreign nationals. Local NGOs have been not been well funded, a reality that limits their operational capacity to invest significantly in human and systemic development. Closer civil society partnerships with the private sector, donor community and the public sector itself should be mutually reinforcing in expanding development possibilitiesinthis area. A2.3 Recent Responsesto the Capacity Crisis Under the 150-Day Action Plan, an estimated 65 million USD was committed by development partners and the Government of Liberia for deepening capacity. Most of this was centered in the economic revitalization pillar, which has oversight responsibility for the Governance and Economic Management Assistance Program (GEMAP) and other major capacity interventions. Sizeable sums have also been earmarked for rebuilding capacity in the security pillar and a smaller amount allocated to building public service capacities. Apart from GEMAP, several other ongoing interventions are noteworthy: 0 TheLiberianEmergency Capacity-building Supportprogram: Initially programed at 2 million USD, there are t w o components. One representsvarying salary supplements for selected public servants in critical public sector positions and designed to kick start the nation's economic recovery. The other is for promoting capacity-building activities among national institutions. The program is presently funded by the Open Society Institute (OSI) and the United Nations Development program (UNDP), but is open t o other partner contributions. 0 The Transfer of Knowledge ThroughExpatriate Nationals program: A new program building on previous experience, the TOKTEN program funded by UNDP and amounting to some 2.1 million USD has just been approved. It is hoped that the program will fund 2 0 national expatriates and 15 local professional Liberian nationals for periods up t o 18 months in critical areas of public sector management and reform. It should also support necessary capacity-building activities in areas where the experts will be located. Supplementalfinancing from other donor partners is also being sought to expand the program. 0 A Senior Executive Service program that will fund the availability of some 100 technically and professionally proficient Liberians across the public service is also being actively considered and is under preparation, with strong partner support. A2.4 Embedding Capacity Development Interventions in the Emerging Medium-TermAgenda Given the challenges and the thrust of government in the short term, the cornerstone for a capacity-buiIding program wilIemphasize the f01lowing: 0 Building management, operational and technical skills for all three branches of government; 0 Creating effective regulatory, economic, monetary and financial institutions; 0 Developing appropriate framework and structures for deeper public/private partnerships; 0 Consolidating and expanding public sector reform; 0 Defining and strengthening local governance operational framework and delivery capacities. In structuring future interventions within and beyond the ongoing iPRS implementation period, it is imperative that such responses are anchored within an overarching national strategic capacity development framework. Such a framework should have as key building blocks: 0 The need to foster broad-based national reconciliation and sustain peace; The restoration of damaged social capital; 0 Reform of the governance system, including an aggressive fight against corruption; 0 Clear manpower needs assessments (demand and supply side), involving Liberians at home and within the diaspora; Strengthening the overall capacity for national development management; Adequate recognition of the critical importance of robust capacity in the private and civil society, beyond that in the public sector. A2.5 Conclusion In the final analysis capacity, perhaps more than any other variable, will determine how quickly Liberia will turn itself around in coming years. It needs to be rebuilt at all levels public sector, private sector, civil society almost simultaneously. But while every area could conceivably be considered a priority for capacity enhancing support, clear and decisive prioritization as well as sequencing and targeting of responses will be crucial. As a start, capacity development entry points and interventions during the iPRS/PRS periods should revolve around the four pillars. Even within that framework, priority should go t o those activities that would quickly foster growth, create new jobs and facilitate the delivery of services. What is also clear is that to do this correctly and have the desired impact, capacity issues must be looked at in a comprehensive, integrated way, even as prioritization is necessary.