Monrovia – Liberia continues to face significant development challenges on the heels of low overall productivity and economic efficiency; huge infrastructure gaps in terms of roads, electricity, water, and telecommunications; and inadequate level of human capital.
To address these challenges and boost economic growth, the World Bank advised substantial investments in people are required.
“Significant investments in people are required for Liberia to transition to an economic path that reliably provides inclusive and sustainable growth as well as broad-based improvements in poverty and social outcomes. In other words, well-educated people are critical for sustainable development.”
The World Bank made the warning during the launch of the third edition of Liberia Economic Update for 2021, a series of annual reports that assesses recent economic developments in Liberia and assists the government and its development partners in identifying emerging issues and addressing persistent challenges.
In its latest report, the Bank said, while the Liberian economy experienced strong growth in 2021, its Human Capital Index (HCI) is as low as 0.32, performing better than only three countries in the world—out of 174 countries assessed.
The Bank used two measures of human capital: the Human Capital Wealth (HCW) component and the Human Capital Index (HCI).
HCW quantifies the current value (the value today) of the future earnings of the current workforce, while the HCI measures how well countries are preparing, today, the next generation of workers. It quantifies the value of the future earnings a child born today can expect to attain by age 18, given the risks to poor health and poor education that prevail in the country where she lives.
Delving extensively on the HCI, the Bank reported that Liberia’s human capital outcomes are performing better than only three countries in the world—namely, the Central African Republic (0.29), Chad (0.30), and South Sudan (0.31)—out of 174 countries assessed.
An HCI of 0.32 implies that a child born today in Liberia may reach only 32 percent of her productivity potential due to shortfalls in education and health.
According to the bank, the HCI considers five variables that could be grouped into three components—survival, school, and health— that are likely to affect the earnings of the future generation of workers.
By 2020, the human capital gap in Liberia was mainly driven by poor education-contributing 50 percent, poor health -12 percent, and survival -7 percent; adding the loss of human capital due to poor education has been growing.
The Bank said with the survival rates and health conditions that prevailed in 2000, 41 percent of future productivity loss was attributable to the poor education system in Liberia. By 2020, 50 percent of Liberia’s loss of human capital was due to poor education, an increase of 9 percentage points.”
School enrollment rates have broadly declined during the period under review, yielding a lower number of years of schooling that a child born today can expect to have received by the time she reaches age 18, while poor schooling causes the highest loss of human capital in Liberia.
This factor, the Bank notes, results in 61 percent of the loss in human capital that Liberia could aspire to with children’s full survival to age five and full health.
And the main driver of the poor outcome in education is the low expected learning-adjusted years of schooling, it said.
According to the report, a child born in Liberia today can expect to obtain only 2.2 years of effective quality schooling by age 18, given the prevailing pattern of enrollment rates and current scores in harmonized tests from major international student achievement testing programs.
On health, the Bank reported that the loss of human capital due to poor health reflects the combined effects of the prevalence of stunting and health risks in the country. A child born in Liberia today has a 70 percent chance of reaching her fifth birthday without being stunted, a level comparable to Liberia’s neighbors Guinea and Sierra Leone, but lower than in countries like Ghana and Senegal.
Although the stunting rate has been declining during the last decade, 10 percent of children under five in Liberia are severely stunted; and it has the sixth- and eighth-highest stunting rates among the 16 countries that typically comprise the West Africa region.
Also, in the report, the Bank outlined that Liberia loses seven percent of the human capital it could aspire to, with complete education and full health, to the under-five mortality rate.
The productivity interpretation of the survival rate is very straightforward, as the mortality rate is a direct loss of human capital; adding that while the expected future productivity of a child born today is reduced by a factor equal to the survival rate, relative to the benchmark where all children survive.
The Bank said in Liberia, the probability that a child born today survives past age five is estimated at 0.93. In other words, of 100 children born, 93 will survive to the age of five, while seven will not. The bank, meanwhile, there are large disparities of survival to age five across regions or counties in Liberia.
According to the Demographic and Health Survey (DHS) 2020, the survival rate is relatively high in counties such as Bong, Nimba, Lofa, and Rivercess, where the under-five mortality rates are the lowest, whereas it is low in counties such as Grand Cape Mount, Sinoe, and Grand Bassa, where the under-five mortality rates are the highest. The survival rates are slightly higher for girls than for boys, a common pattern across countries.
Compared to neighboring Economic Community of West African States (ECOWAS), the Bank notes that the loss of human capital due to under five mortality is higher in Liberia than in Senegal, Ghana, The Gambia, and Togo, but lower than in Nigeria, Sierra Leone, Guinea, Mali, Benin, Niger, and other countries.
The Bank noted that while factors contributing to Liberia’s low human capital outcomes are multiple and complex, some of the leading ones include weak governance, ineffective service delivery, demographic pressures, and low and inefficient social spending. The disconnects among government agencies responsible for human capital development result in unresponsive, suboptimal service delivery, it added.
On the heels of weak governance, ineffective service delivery tends to hinder higher HC accumulation by generating low-quality and unequal provision of social services, the Bank stated, adding that Liberia’s current demographic profile presents an opportunity for the country to tap into its demographic dividend and grow its HC and economy, but it also entails a considerable risk if this opportunity is not catalyzed with the right policies.
Without a significant decline in fertility, it said Liberia might face an ever-growing population base and ever-larger youth cohorts—with children further exposed to health risks, malnutrition, stunting, and lower public and private educational investments. Furthermore, social spending remains low and inefficiently managed.
Signs of Progress
Despite these negative trends, the Bank pointed out that Liberia has shown some progress in access to education and improvement of health outcomes over the last few decades, but gaps in complete education and full health are huge. Liberia has experienced a steady decline in infant mortality, with a significant increase in child survival rate, up from 0.81 in 2000 to 0.93 in 2019.
According to the United Nations Children’s Fund (UNICEF 2020), the basic vaccination coverage among children ages 12 to 23 months has improved since 2013, rising 10 percentage points—from 55 percent to 65 percent in 2020. Similarly, the number of students enrolled in the education system (from early childhood to upper secondary education) increased fivefold, from 300,000 in 1981 to 1.5 million by 2015.
However, much of this progress was achieved through services provided by nongovernmental organizations. Improving the HCI would require significant interventions in the education sector.
The Bank has pointed out that gains in both the length of schooling and the effectiveness of learning would help improve the schooling component of the HCI; noting that a special focus on overage education would be needed to boost the expected number of years of schooling in the country.
The Bank called on Liberia to invest urgently in education statistics, adding that the production and dissemination of reliable education statistics will be essential for effective education sector management and for monitoring progress toward national and global education targets.
In addition, it called on the government to dwell on its strides in investing in its people, recommending that Liberia should now move much more deliberately toward direct investments in high-impact programs, on both the demand and supply sides; increase investments; and target resources to priority regions to significantly improve the standards of living of all Liberians.
Investing in human capital will be crucial for Liberia to grow faster, reduce poverty, and deliver substantial social benefits in the long term, the Bank stated.
To achieve this, the Bank said it will require improving governance and building synergies among government agencies involved in human capital development; improving the level and efficiency of social spending, especially education spending; designing, adopting, and implementing a special program to eradicate overage education in Liberia; investment in education statistics—education management information systems (EMIS)—to inform sector policies and interventions.
It called for the institution of regular learning outcome measurements aligned with international standards; building and retaining capacity within the education and health workforce to enhance quality-of-service delivery in the education and health sectors, harnessing demographic dividends through investments in skills development and health care, and instituting policies to slow fertility.
“All this can be done only if the country continues to ensure overall macroeconomic stability, underpinned by prudent monetary and fiscal policies, to foster growth and create an enabling environment for reform implementation,” said.