The Final State of the Union
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Summary:
How investment can provide critical growth in countries recently affected by Ebola.
On behalf of the Overseas Private Investment Corporation, the development finance institution of the United States, I recently led a delegation of investors to Liberia and Sierra Leone.
Our aim, in both of these post-Ebola nations, was multifaceted.
We wanted to show our solidarity with those in Liberia and Sierra Leone who have suffered and continue to grieve profound losses. We wanted to hear from local investors, businessmen and government leaders about the business opportunities and challenges to realizing long term investment in these economies. We wanted to bring international private investors to explore opportunities in priority sectors such as infrastructure, power, health care and education. And, we wanted to send a positive signal to the rest of the world that, once again, these nations are open and eager to attract new sources of private capital.
Everywhere, we saw stark contrasts, and we saw the green shoots of progress.
The depth of devastation visited upon Liberia’s economy by the civil war is still very much evident in the power infrastructure. In a country where 84% of Liberians currently live on less than $1.25/day, matters are made worse by only 2% of the population having access to grid power. Altogether, Liberia still has less than 25 MW of electricity in its main grid—roughly one tenth of its capacity before the civil war, and an even smaller fraction of what the population needs. And, take for a second the average tariff of power in Liberia: $.49/kWh. This is one of the highest power prices in the world, with neighbors like Sierra Leone paying significantly less at an average tariff of $.29/kWh.
Despite the energy challenges, we were able to visit the construction site of the Mount Coffee Hydropower Plant, funded in part by the U.S. Millennium Challenge Corporation and supporting the President’s Power Africa initiative to increase energy access on the continent. Once completed, it will be able to provide up to 88 megawatts of additional electricity to Liberians.
In Sierra Leone, the energy challenges are similar: only 13% of Sierra Leone’s citizens have access to the power grid, and only 1% of the rural population have access to electricity. However, meeting with a number of energy entrepreneurs, including those focusing on off-grid energy, proved that the energy future could be bright.
In both nations, we heard from government officials about the tragic and far-reaching extent of the Ebola crisis, and about how its arrival amid the collapse of commodity prices delivered a doubly punishing economic blow.
Yet we also heard firsthand about the resilience of the Liberians and Sierra Leoneans, and their determination to invest for the long term in better, safer and more prosperous lives for themselves, their families and their countries.
Aid will continue to be necessary. Both nations--small, impoverished and loosely integrated--will need help in multiple sectors that are not yet ready for private investment. But there are many sectors that could be attractive for private investors, provided they have appropriate incentives and business-friendly government rules, policies and processes. Private capital partnerships between local and international investors such as those whom we brought on this delegation will be essential to rebuilding, creating employment and spurring economic growth.
Private investors, for example, may be able to build both on-grid and off-grid power sources. They could invest in regional infrastructure investments in roads, rail, airports, bridges and ports. Medical care facilities and agriculture projects could be made attractive to them as well. OPIC’s mission and privilege is to provide finance and insurance to just the kind of top quality, committed private investors that Liberia and Sierra Leone needs to help build a growing, inclusive economy.
For example in the health sector, in Liberia where there is a severe shortage of qualified physicians - there is only one doctor for every 50,000 people - the Liberian people have access to only 1% of the per-capita medical expertise that Americans enjoy. Yet Liberians still need medical care and many that can afford it travel instead to Ghana or Nigeria for crucial care – paying thousands of dollars on flights and travel, alone. The JFK Medical Center in Monrovia can and should be upgraded with private service providers and clinics to keep medical dollars in country.
Working directly or combining our resources with our sister development agencies such as USAID, we are ready to support Sierra Leone and Liberia. USAID is working in both Liberia and Sierra Leone to help build up systems such as health information systems, which will ultimately benefit from expanded access to energy and communications infrastructure. The U.S. Global Development Lab within USAID is also working to bring private sector investors and partners back into West Africa post-Ebola to support economic recovery and strengthen health systems. Private sector partners in this work include: Chevron, Coca Cola, PanAfrican Capital, GlaxoSmithKline, and Merck Sharp & Dohme.
OPIC already provides more than $1 billion in financing each year across Sub-Saharan Africa to help build power plants, affordable housing, telecommunication systems, schools and hospitals. We have seen mere possibilities turn into projects with development impact that markedly improves lives. In the years ahead, we will continue to work with the people of Liberia and Sierra Leone to attract just the kind of investors they so richly deserve.
Elizabeth Littlefield is President and CEO of the Overseas Private Investment Corporation.
