Includes special features of this country’s banking system and rules/laws that might impact U.S. business.
Last Published: 9/25/2017
The CBL is responsible for licensing, regulating and overseeing the financial sector in Liberia.  In 2016, banking sector recorded growth in key balance sheet indicators including liquidity, capital position and net shareholders’ worth.  Total bank assets rose by over 5 percent, and capital and deposits grew by 21 percent and nearly 4 percent respectively.  Most banking institutions operate as repositories for funds and provide short-term trade financing and operating capitals.  Historically, commercial banks have had no domestic instruments into which to place liquidity.  Foreign banks or branches can establish operations in Liberia, and are subject to prudential measures or other regulations required by the CBL.

There is no effective credit rating system and many firms lack business records or bankable proposals necessary for credit approval.  Banks rely on the CBL’s Credit Reference System, a manually updated spreadsheet which is being automated. It contains credit history and/or any derogatory information about certain creditors. There are no clear or definitive rules on hostile take-over.  The obstacles to domestic travel including poor roads, lack of affordable electricity, and unreliable communication links increase the risk in accepting collaterals outside Monrovia.  The unreliable land titles system also hampers access to credit in general, especially for local entrepreneurs.
Although key financial indicators show that the banking sector is sound, non-performing loans (NPLs) and poor earnings remain major challenges.  The percentage of non-performing loans (NPLs) to total loans stood at 11.8 percent in 2016, which is 6.2 percentage points below the 18 percent in 2015. The CBL in collaboration with the Liberia Bankers Association and commercial banks has embarked on strict measures to address this situation.  While financial institutions allocate credit on market terms to foreign and domestic investors, the historically high rate of NPLs has led banks to offer short-term (less than 18 months), high-interest rate loans (12-20 percent).  This constrains capital investment and limits new business development.  Generally, banks rely on fees and interests they charge for transactions and services such as fund transfers, deposits and withdrawals, checks, letters of credit, etc.  A number of banks offer modern digital financial products and services including ATMs, point of sale (POS) terminals, electronic fund transfer (EFT), and mobile money.  The ATM system is not connected to global electronic banking networks.  Therefore, traveler's checks and credit cards are not commonly accepted.  Mobile money service is not widely used as the service is new to the population and is being offered by two GSM companies in collaboration with commercial banks.  However, there is potentially high demand for mobile money service given the country’s poor financial infrastructure and the high costs of keeping cash, including security risk.  There is a thriving non-bank financial sector including licensed, regulated and supervised institutions.  The sector comprises several foreign exchange bureaus, credit unions, village savings & loan associations (VSLAs), rural community finance institutions, microfinance institutions, a development finance company, mobile money service and insurance companies.  Most of these institutions, particularly those in the informal sector, make short-term, high-interest rate loans to their members. The CBL’s regulations can be found on its website.

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Liberia Market Access Banks