MONROVIA – The Government of Liberia and three financial institutions have signed agreements to participate in the Line of Credit (LOC) as part of the World Bank-funded Liberia Investment, Finance, and Trade (LIFT) Project.
By Gerald C. Koinyeneh – [email protected]
The three selected financial institutions are Citi Trust, Afriland Bank, and the Liberia Enterprise Development Finance Company (LEDFC).
The LOC is a component of the broader LIFT Project, which aims to support a Micro, Small, and Medium Enterprises (MSME) Lending Scheme. This scheme will provide lines of credit totaling US$6 million to participating financial institutions (PFIs) for eligible small and medium enterprises. Additionally, US$1 million will be allocated for providing technical assistance to PFIs and the Central Bank of Liberia (CBL).
Speaking at the signing ceremony, World Bank Liberia Country Manager Georgia Wallen highlighted the significance of this milestone for the project and for SMEs across the nation. She praised the leadership of Executive Governor of the CBL, J. Aloysius Tarlue, and the Minister of Commerce and Industry, Amin Modad, for their roles in advancing the project.
Ms. Wallen emphasized the crucial role SMEs play in the global economy, representing more than 95% of registered firms worldwide, accounting for over 50% of jobs, and contributing more than 35% of Gross Domestic Product (GDP) in many emerging markets. In Liberia, she noted, SMEs are the backbone of the economy and essential for economic diversification and job creation.
“Linking SMEs to the financing and support they need to grow and scale is at the heart of the development objective of the LIFT Project,” she said.
In Liberia, many small and medium businesses struggle due to lack of access to finance, infrastructure, high utility costs, and education. Ms. Wallen reiterated these challenges and noted that the most recent World Bank Enterprise Survey identified access to affordable and appropriate finance as the top constraint for businesses in Liberia. The LOC aims to address this by providing financial institutions with the means to scale up their lending to SMEs.
The SMEs will receive loans with longer maturity periods, allowing them to generate returns on their investments without the immediate burden of repayment.
CBL Executive Governor Aloysius Tarlue expressed gratitude to the World Bank for its support. Commerce Minister Amin Modad also commended the Bank for the program and urged financial institutions to prioritize Liberian businesses.
Jay Gbleh-bo Brown, head of the Development Finance Section at the CBL, explained that the MSME Lending Scheme aims to improve access to finance through capacity building of selected financial institutions. This will be achieved by providing sub-loans to MSMEs on sustainable terms, enhancing the capacity of local private sector financial institutions to lend profitably to MSMEs, and strengthening the capacity of the CBL through training and advisory services.
The project will offer technical assistance and training to improve PFIs’ loan delivery systems, risk management, and support for innovative products for MSMEs. It aims to contribute to more affordable and sustainable interest rates on loans, with grace periods and longer maturities based on a better understanding of MSME credit risk. Additionally, the scheme seeks to establish a permanent development financing vehicle based on market principles, target MSMEs managed or owned by women entrepreneurs, encourage long-term financing with loan maturities of up to five years, and provide related technical assistance and training to all interested financial institutions.