Youth employment in Liberia has been a significant concern for several years. Young people account for nearly 70 percent of Liberia’s population of 4.8 million, and youth unemployment is estimated as high as 85 percent in some areas and even higher in many rural communities.
Over the next 12 months, Musons Group International (MGI) and Kennedy & Williams (KW) will continue to roll-out an innovative construction development and home financing strategy to build gated communities in several scenic areas in Liberia. The partners kicked-off their plan with the construction of an upscale community for a private investor in Clay Ashland.
The partners plan to develop several beautiful gated communities in Marshall and along the Robertsfield Highway corridor
Additionally, the partners will continue to engage Liberians living in the diaspora who have seized the opportunity to work directly with a reputable construction management firm with offices in Liberia and the United States to build, renovate and remodel their homes in Liberia.
Because an effectively promoted home construction investment in developing countries has a far-reaching impact on economic development, it is often seen as a potential quick source of jobs.
We gauge annual job creation of about 50 thousand in direct jobs, and following the Keynesian methodology, we estimate an additional 75 thousand in direct, indirect, and induced construction-related jobs. Today, the Liberian economy is still reeling from the effects of the Ebola crisis, and home construction could provide immediate relief.
In 2018, the country’s economic growth rate fell from 2.5% to 1.2%. According to the World Bank, the growth rate is expected to fall even lower to 0.4% in 2019. The country’s inflation rate has reached an all-time high of 28% which is fueled by a substantial depreciation of the Liberian dollar against the US dollar (20% year-over-year) leading to a dramatic increase in the cost of living for average Liberians.
The World Bank reports that Liberia’s fiscal deficit has expanded from 4.8% of GDP in FY2017 to 5.5% of GDP in FY2018. These economic challenges compound the fact that there are limited job opportunities in this country of 4.8 million.
Why Youth Employment in Liberia is Critical
In 2013, on a trip to Brussels, former Liberia President Ellen Johnson-Sirleaf lamented that “Youth unemployment is a major threat to peace and security in Liberia which, unless addressed, could see the return of conflict to the West African country following a decade of peace.”
Madam Johnson-Sirleaf further added, “Peace and security in Liberia is still an issue because of the young unemployed, and until we address that, there’s always hanging over us the chance that there may be a resumption of conflict.”
Creating jobs and closing the gap in Liberia’s fiscal deficit will lead to a significant increase in tax revenue. Liberia can begin this economic makeover process through an influx of direct and innovative investments in the construction sector. The provision of decent and affordable housing in urban areas is vital for attracting expatriate back from the diaspora and keeping well-educated Liberians in the country. But the benefits of fair and affordable housing go beyond providing living quarters and into economic development.
The profile on Liberia shows that, by 2030, the population is expected to grow by 1.8 million and about half of which will be in Monrovia. Today, roughly 25 percent of Liberia’s population lives in Monrovia, a capital city designed to hold a third of that amount. Data suggests that 512,000 new homes will be needed by 2030 to meet local demands. That is, 30,000 new homes will be required each year or one every 4.8 minutes of every working day.
Homeownership in Liberia offers several advantages, including price appreciation and the ability to use one’s home to access capital and start a business – a sustainable and practical path out of poverty.
Unfortunately, few homebuyers or those looking to build a home in Liberia have sufficient financial resources to make an all-cash purchase or build without bank financing. Moreover, nearly all banks in Liberia lack the wherewithal to lend money comfortably through a mortgage process due to risks associated with liquidity, interest-rate, and credit. As a result, the home-building market is slow and stagnant. The business model rolled-out by MGI and KW will address these shortcomings.
It is a known fact that Liberia has a growing housing sector. Still, the home financing market does not yet meet the breadth of the demand; most households are still financing their home independently with savings or non-mortgage credit. Access to home financing is a significant challenge that deters a majority of the population from home ownership.
In most advanced economies, the government is an essential player in the housing finance system, both supporting the network and regulating it. We expect the Government of Liberia to become a necessary player in regulating the market. At the national level, the government will enhance the legal and regulatory processes while removing hurdles on the local level.
If Liberia is to start tackling its unmet housing demand and boost economic development, it will need to reconceptualize and mobilize massive amounts of private capital investments and remittances via construction projects from expatriates. Growing the private home financing market is part of the financial solution Liberia needs.