Includes special features of this country’s banking system and rules/laws that might impact U.S. business.
Last Published: 3/30/2019
The CBL is responsible for licensing, regulating, and overseeing the financial sector in Liberia.  In 2017, the banking sector recorded growth in key balance sheet indicators including liquidity, capital position, and net shareholders’ worth.  Total banks’ assets rose by 30.1 percent, total capital by 38.4 percent, total deposits by 19.4 percent, and total loans by 36.1 percent.  However, the CBL attributed the banking sector’s growth mainly to the depreciation of the value of the Liberian dollar against the U.S. dollar.  Liquidity for the sector remained high during the year with a liquidity ratio of 41.8 percent, far above the CBL’s mandatory 15 percent minimum requirement.  Most banking institutions operate as repositories for funds and provide short-term trade financing and operating capital to businesses that have good credit records.  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 manual Credit Reference System (CRS) which provides information to banks and non-bank financial institutions about borrowers’ credit history, including any derogatory information.  The CBL has a centralized Collateral Registry used by financial and non-financial institutions to register security interests in movable property only.  Its primary objective is to create access to finance for businesses, especially micro-, small and medium enterprises (MSMEs).  The system is used by legal entities and individuals clients/creditors.  There are no clear or definitive rules on hostile takeovers.  The obstacles to domestic travel--including poor roads, lack of affordable electricity, and unreliable communication links--increase the risk of accepting collateral based outside Monrovia. The unreliable land title 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 increased from 11.8 percent in 2016 to 13.6 percent in 2017.  The CBL, in collaboration with the Liberia Bankers Association and commercial banks, has attempted to address this situation by “naming and shaming” delinquent borrowers and barring noncompliant borrowers from accessing future financial services.  While financial institutions allocate credit on market terms to foreign and domestic investors, the historically high rate of NPLs has led banks limit credit to short-term (less than 18 months), high-interest rate (12-20 percent) loans.  This constrains capital investment and limits new business development.  Generally, banks rely on fees and interest charged for transactions and services such as fund transfers, deposits and withdrawals, checks, and letters of credit.  Few banks offer modern digital financial products and services, including ATMs, point of sale (POS) terminals, electronic fund transfers (EFTs), 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 outside urban areas, but the service is becoming more accessible to the rural population.  However, there is potentially high demand for mobile money services given the country’s poor financial infrastructure and the costs and risks associated with keeping cash at home.  There is a thriving non-bank financial sector, including licensed, regulated, and supervised institutions.  The sector comprises foreign exchange bureaus, credit unions, village savings and loan associations (VSLAs), rural community finance institutions, microfinance institutions, a development finance company, mobile money services, and insurance companies.  Most of these institutions, particularly those in the informal sector, make short-term, high-interest rate loans to their members.  A list of the CBL’s regulations can be found on its website.

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Liberia Market Access Banks