How an aid gusher helped and hurt Liberia

Two violent civil wars in Liberia killed a quarter-million people between 1989 and 2003 and destroyed the West African country’s economy. A massive influx of foreign aid followed that turmoil, ushering in a period of relative peace and stability. Yet​,​ Liberia remains among the world’s poorest countries.

In 2017, one democratically elected president stepped down and another took office for the first time in over 70 years. At the same time, Liberian foreign aid subsided. According to the World Bank’s database, total aid fell from an all-time high in 2010 of US $359 per capita to about $130 in 2013, although aid flows did rebound briefly to $243 per capita during the country’s 2014-2015 Ebola crisis.

Liberia’s economy is struggling. Reportedly accompanying these economic woes are an uptick in violence and political unrest. Thousands protested how the government is handling the economy in June 2019.

We belong to a team of researchers that includes one Liberian, several Americans and people from India, Nigeria​,​ and other countries. Our team has been working to reduce political violence in Liberian communities by partnering with local leaders, concerned citizens, and police forces.

Because we know economic and political tensions often rise as foreign aid agencies withdraw, we are deeply concerned about the longterm prospects for Liberia’s newfound stability. We also believe the situation in Liberia may serve as an example of how foreign aid that can seem to be healing a war-torn country’s wounds may do little to strengthen those nations in the long term.

A short-lived patch

Overseas development assistance, the most common kind of non-military foreign aid, is a mix of money, food, and​ other supplies. In Liberia’s case, it has included everything from UN peacekeepers to nurses caring for pregnant women and newborns. 

The civil wars slashed the size of Liberia’s economy by 90 percent, causing its gross domestic product, or GDP, to decline to only $54.50 per capita by 1995. In large part due to the foreign aid influx, its gross domestic product ballooned from $748 million in 2003 to $3.3 billion in 2017, with a per-capita GDP of about $600.

Relying heavily on temporary foreign cash established a false sense of stability and growth in the economy. The lasting impacts of Liberia’s aid flows are coming into focus now that much of the world has moved on.

The United Nations Mission to Liberia has pulled out altogether. Other major organizations and countries have reduced their funding too.

Aid from the U.S., whose leaders helped found Liberia in the 19th century as a destination for freed African Americans who either moved there by force or free will, dropped from $228 million in 2011 to $86 million in 2018.

There were two apparent aftershocks: inflation surged and growth faltered.

After hovering around 8 percent in recent years, Liberian inflation reached an all-time high of 28.5 percent in 2018. Following years of growth rates ranging between 5 to 10 percent per year, the economy contracted in 2016 and growth remained low for the next two years.

The International Monetary Fund projects a meager 0.4 percent uptick in 2019 that will not keep up with population growth. Many Liberian civil servants have told us that their pay is being cut or their paychecks delayed.

Too much aid?

International economists have tried and failed to prove that getting more aid makes economies healthier, even when a boost in aid coincides with faster growth. In this case, international assistance may have merely propped Liberia up.

The $776 million in aid per year Liberia obtained between 2010 and 2017 accounted for anywhere from 40 percent to 25 percent of its GDP during that same period.

Real gains

Even so, it is hard to see a country in crisis and do nothing.

In 2007, for instance, foreign aid paid for more than three-quarters of the cost of Liberia’s health care. Without it, many more people, especially children, would have suffered malnutrition and died.

Spending also brought about many other significant benefits. For example, the share of children dying before their fifth birthday fell by half, from 220 per 1,000 live births in 1986, to 110 in 2007. Liberian life expectancy gained a decade after the war ended in 2003, rising from about 53 to 63 years and is much closer to the global average than it used to be.

It’s easy to see that when foreign aid provides most of a country’s health care, withdrawing it can leave that health system in tatters.

Jessica Eise Ross Fellow is in the Brian Lamb School of Communication Doctoral Program at Purdue University and Stacey L. Connaughton is an associate professor and director of the Purdue Peace Project at Purdue University.

Republished by permission from The Conversation.