Expansion of agriculture, forestry and mining.
Liberia published its 5th EITI Report covering the fiscal year 2011/12 on 30 June. As with previous reports, Liberia EITI (LEITI) has gone beyond the EITI requirements by including forestry and agriculture, in addition to oil and mining.
Government revenues from the extractives sector remained relatively stable, with an increase from US $102 million (2010/11) to US $110million. The sum is equivalent to approximately 14% of Liberia’s real GDP in the reporting period, and 34% of estimated total government revenue.
Compared to the previous year, there has been a significant shift in Liberia’s revenue structure.
Comparison of revenue structure of 4th and 5th EITI Reports. Oil revenues decreased significantly by 59% while the other extractives sectors grew and compensate for the drop in oil income.
Drop in oil money
Payments from the oil industry dropped by 59%. Oil revenue had been unusually high in the previous report due to significant one-off payments. In late 2010, Chevron bought a majority stake in Liberian offshore oil blocks from Oranto Petroleum, which resulted in the government earning US $40million in taxes and signature bonuses from the companies.
Petroleum projects are still in the exploration phase and there is no production. Ten of Liberia’s 30 oil blocks have been awarded to companies including Anardako, Chevron and Exxon. Oil has been discovered, although not yet in commercial quantities.
Mining leads in revenue, agriculture in employment
Mining is the most significant source of income and contributed over half of all government revenues from the extractive sector in 2011/12. Liberia is rich in iron ore, gold and diamonds.
One mining company alone, Western Cluster, contributed 25% to the total mining revenue. The company is developing several iron ore deposits in Liberia and paid signing fees worth US $25million. In August 2011, Western Cluster became a subsidiary of Sesa Goa Ltd, a Vedanta Group company.
Agriculture’s share in extractive revenues climbed to reach 25%. Payments made by Firestone Liberia, a rubber producer, and Liberia Forest Production Inc, a palm oil company, increased from US $14 million to US $23million, pushing agriculture revenue up.
This sector employs approximately half of the population, compared with only 2% in mining.
Forestry remains less important in monetary terms, despite revenues from this sector doubling from US $5.5million to US $11million. Liberia’s key exports include rubber, iron ore, palm oil and logs. In January 2013, President Sirleaf-Johnson introduced a moratorium on the export of timber to halt deforestation.
Data quality to be strengthened
The extractive sector plays a substantial role in the economy, and especially mining has driven economic growth in past years, although limited infrastructure remains a challenge. The Report recommends further improving the database on extractive companies. There are ambitious plans to publish an on-line register soon.