This information is derived from the State Department's Office of Investment Affairs’ Investment Climate Statement. Any questions on the ICS can be directed to
Last Published: 8/10/2017

Capital Markets and Portfolio Investment

The government does not have foreign portfolio investment abroad and there are no domestic capital market or portfolio investment options, such as a stock market, in the country.  Therefore, private sector investors have limited credit and investment options.  The Central Bank of Liberia (CBL) has begun to issue Treasury bills (T-bills) in an effort to develop a capital market.  Foreign investors can participate in the T-bill auctions which are often over-subscribed.  The monthly T-bill auction has a three-month maturity term.  The CBL has successfully operationalized aspects of the Scriptless Securities Settlement System (DEPO/X) in combination with efforts to create a secondary market that would lead to a more vibrant financial market.  The DEPO/X system is a well-organized electronic platform that supports the conduct of the FX Auction and processing of government securities.  The CBL respects IMF Article VIII by refraining from implementing restrictions on payments and transfers for current international transactions.

Money and Banking System

The banking sector continued to show growth in key indicators in 2016.  There are nine commercial banks, eight of which are foreign banks.  Foreign banks or branches can establish operations in Liberia, and are subject to prudential measures or other regulations required by the Central Bank of Liberia (CBL).  Total bank assets rose by over 5 percent, and capital and deposits grew by 21 percent and nearly 4 percent respectively.  The total assets of the country’s largest commercial bank (in term of customer size) are approximately $23.55 million (Ecobank Liberia, 2016).   Generally, the financial system remains strong and resilient despite slow growth in the domestic economy.  According to the CBL report (2016), the banking system continues to be well capitalized and liquidity remains strong.  However, high levels of non-performing loans remain a concern.  Liquidity for the sector remained strong during the year with a liquidity ratio of 36.8 percent, which is well above the 15 percent minimum requirement.  Overall, the financial system has grown stronger and remains resilient, despite the legacy of the negative impact of the Ebola crisis and external shocks from the fall in international commodity prices.
Non-performing loans and poor asset quality, which depress profitability, remain major challenges in the banking sector.  The ratio of non-performing loans (NPLs) to total loans stands at 11.8 percent in 2016, which is 6.2 percentage points below the 18 percent level of 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.
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-overs.  Foreign banks or branches are allowed to establish operations in Liberia, and are subject to prudential measures or other regulations set out by the CBL.  The obstacles to domestic travel including poor roads, lack of affordable electricity, and unreliable communication links increase the risk in accepting collateral outside Monrovia.  The unreliable land title system also hampers access to credit in general.

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment (e.g. remittances of investment capital, earnings, loans, lease payment, or royalties).  Liberian law allows for the transfer of dividends and net profits after tax to investors’ home countries.  The Investment Act allows unrestricted transfer of capital, profits, and dividends “through any authorized dealer bank in a freely convertible currency.”  Therefore, funds associated with any form of investment can be freely converted into any world currency.  The Central Bank of Liberia (CBL)’s regulation concerning transfers of foreign currency stipulates that every business house, entity, or individual wishing to make a foreign transfer of funds may do so without limitation of amount to be transferred.  However, the amount to be transferred must have been in an entity’s bank account for no less than three banking days prior to the transfer.  Though conversion restrictions do not exist, the CBL currency auctions are often oversubscribed, and it may take investors more than a week to exchange large sums of money.

Liberia has a floating exchange rate system with both Liberian dollars (LRD), known as “Liberty” notes, and the U.S. dollars (USD) being legal tenders.  The exchange rate is determined by market supply and demand.  The CBL regularly intervenes in the foreign exchange market through weekly foreign exchange auctions and monthly government T-bill auctions in order to stabilize the exchange rate, facilitate imports, maintain a low inflation rate, and spur economic growth.  Large-scale business and government transactions are conducted in USD, while retail or day-to-day routine transactions are conducted largely in LRD.  Contracts and tax agreements are typically specified in USD, and about 85 percent of taxes are paid in USD.  The USD can be freely exchanged for LRD in commercial banks, licensed foreign exchange bureaus, petrol stations, and large supermarkets.  It is advisable for foreign investors to conduct foreign exchange operations with commercial banks or established licensed forex bureaus.

Remittance Policies

There are no recent changes or plans to change Liberia’s investment remittance policies to affect access to foreign exchange.  Generally, there are no legal time limitations on remittances, or on the inflows or outflows of funds for remittances of profits or revenue.  Due to the limited number of correspondent banking relationships, bank fees related to currency exchange and wire transfers can be high.  In general, corporations can remit as much as one million USD through commercial banks.  Transferring banks are required to file normal cash transaction reports with the CBL.  Depending on the amount to remit and the bank(s), the wait-period to remit each type of investment returns range from a few hours to three business days.  However, individuals without a bank account are limited to two over-the-counter transfers of up to $5,000 within a 30-day period.  The CBL instituted thresholds for suspicious transactions for which banks must exercise customer due diligence and know your customer rules.  The thresholds are $25,000 and above for individuals, and $40,000 and above for corporations.  Liberia does not engage in currency manipulation tactics.

Sovereign Wealth Funds

The government does not maintain a Sovereign Wealth Fund (SWF) or other similar entity.

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Liberia Economic Development and Investment Law