Financial Sector Overview

The Central Bank of Liberia (CBL) regulates Liberia's financial sector, comprising banks and non-bank financial firms. The financial industry remained robust, with most institutions able to withstand global shocks. Central banks worldwide adopted traditional and unconventional risk-mitigation approaches, such as liquidity support and tougher controls. Since 2020, the Liberian financial sector remained stable, with banks showing resilience despite COVID-19 effects. In 2021, the CBL urged banks to improve asset quality, ease credit for 3 months for businesses relocating from the Red-light Market, and expand digital financial products, reducing pressure on banks and increasing digital payments. Liberia's commercial banks were encouraged to improve loan recovery and asset quality. The CBL supported digital financial products, increased liquidity, and completed the divestiture of a failing bank in 2023. Emergency Liquidity Assistance was also provided to boost financial sector liquidity. The Liberian financial sector is dominated by banks which have contributed more than 80% of the financial sector's total assets since 2020.

Banking Sector

Liberia has nine commercial banks (Liberian Bank for Development & Investment (LBDI), Ecobank, International Bank, Global Bank, Sapelle International Bank, United Bank for Africa, Access Bank, Guaranty Trust Bank, and Afriland First Bank), with the Liberia Bank for Development and Investment (LBDI) being the only domestically owned bank. The number of bank branches has increased from 85 in 2020 to 90 in 2023. The general performance of the banking sector improved with key balance sheet indicators showing growth due to increased intermediation. Although non-performing loans remained high, they continued to decline, and the industry remained stable, recording a profit during the review period.

The sector's major balance sheet indicators improved since 2020 however in 2021, the banking sector showed mixed results in key balance sheet indicators, influenced by the stronger domestic currency and slow business recovery. In December 2021, total assets, and loans and advances declined by 1.35% and 7.95%, while total capital and deposits increased by 5.06% and (slightly) 0.01% respectively. All balance sheet indicators increased in the fiscal years ending December 2022 and 2023. The banking sector's consolidated comprehensive financial statements showed a total operating income increasing from 2020 to 2021 but declined in 2022, and then by the end of December 2023, the industry's total operating income increased to L$24.01 billion (USD 197.8 million). The operating expenses declined by 14.4% in 2021 compared to 2020 and it has been rising from then to 2023 which totaled L$14.33 billion (USD 117.73 million), a 17.7% rise over the same time in 2022. Regardless of the rising expenses, the total operating income remained higher than the operating expenses, showing profitability over the same period.

Access to bank credit remains constrained in Liberia as a proportion of the GDP, domestic credit to the private sector provided by banks decreased from 14.1% in 2019 to 12.7% in 2021. It however increased to 14.6% in 2022 but remained well below the Sub-Saharan average of 26.7%. Credit to the private sector contracted over 2019-2021, mainly driven by the effects of the COVID-19 pandemic and global shocks including Russia’s invasion of Ukraine.  

The banking sector remained resilience despite internal and external threats and shocks since 2020. Key Financial soundness indicators (FSIs) improved, highlighting the sector's potential and anticipated prospects for continued safety and soundness. The banking sector's Capital Adequacy Ratio (CAR) increased from 2020 to 2021 and decline to 25.34 in 2021. As of December 2023, CAR was 27.31%, well above the minimum requirement of 10%. The liquidity ratio stood at 44.1%, exceeding the regulatory benchmark of 15.0% by 29.1 percentage points in December 2023. However, the industry continues to face challenges with a high Non-Performing Loans (NPLs) ratio of 18.06%, compared to the regulatory limit of 10.0%. This represents a slight deterioration of 1.6 percentage points from 16.4% at the end of December 2022.

The banking sector's Gross and overdrafts and total loan loss provisions rose by 19.6% and 23.6% as of December 2023, indicating adequate provisions against bad loans. As shown in Figure 2, the sector's net profit for the period ended December 2023 was L$6.77 billion (USD 55.77 million). Additionally, the sector's return on equity (ROE) was 17.69%, the return on asset (ROA) was 2.35%, and the net interest margin was 46.44% for the year ended December 2023 respectively. The banking industry maintained a stable liquidity position, with a liquidity ratio of 44.1% at the end of December 2023, surpassing the minimum requirement by 29.1 percentage points. This represents a 0.6 percentage point increase from the 43.5% reported in 2022.

Digital Finance and Financial Inclusion

Financial inclusion in Liberia, as measured by the percentage of the population aged 15+ with accounts increased to 52% in 2021 as compared to 36% in 2017. The population that made or received digital payments also significantly increased from 28% in 2017 to 46% in 2021. Even though financial inclusion increased from 2017 to 2021, the gender gap existed as males with accounts and made or received digital payments proportion has always been higher than those of females in both years. As compared to the other West African English-speaking countries and Sub-Saharan Africa, account ownership in Liberia in 2017 was less than that of Ghana and Nigeria, but in 2021, the Liberian account ownership increased more than that of Nigeria except for the financial institution account. In 2021, the account ownership of Liberia was less than that of Sub-Saharan Africa (SSA) except for the mobile money account which increased to 36.2% in Liberia but decreased to 33.2% in the SSA.

Liberia is in the process of the National Financial Inclusion Strategy (NFIS) 2020-2024 which aims to expand access to financial services in Liberia, particularly through digital channels that can provide tools for all areas of Liberian society to borrow, save, and make payments less expensive.  Despite progress made in terms of financial inclusion, including increased mobile money usage, challenges such as limited access points, high costs, and inadequate legal frameworks persist. Therefore, the NFIS seeks to boost financial access by expanding agent banking, easing account opening, and supporting non-bank financial institutions (NBFIs) regulatory frameworks. It also aims to improve digital financial services (DFS) and strengthen consumer protection. The NFIS sets a goal to increase financial service access from 35.7% to 50% by 2024, guided by a coordinated effort involving both public and private sectors. This will be achieved through a detailed action plan with 36 targeted actions that will support NFIS goals, with a focus on underserved groups like women, youth, and rural populations.

In light of this, the Central Bank of Liberia (CBL), through its Digital Financial Services (DFS) initiative, developed a concept note outlining these activities and shared it with key partners, including UN Women. In 2023, CBL and UN Women signed an agreement to co-finance and support a pilot project aimed at transitioning some Village Savings and Loan Associations (VSLAs) in Nimba and Bong counties from traditional savings boxes to digital savings methods. The pilot was successfully executed, with training provided to facilitators, field engagements conducted with 15 VSLAs, bank, and mobile money accounts opened, and catalytic funding secured for each participant. As Liberia's National Financial Inclusion Strategy (NFIS 2020-2024) nears its end, a comprehensive assessment provided by a DFS initiative will guide the development of a new strategy.

On the other hand, the value of mobile money transactions in Liberian dollars rose from L$140.9 billion in 2020 to L$251.4 billion in 2021. Likewise, transactions in U.S. dollars increased significantly, from US$276.7 million in 2020 to US$1.4 billion in 2021. This growth was driven by reforms introduced by the CBL, including amendments to the regulations for licensing and operating money remittance entities, approval for bilateral integrations between banks and mobile money operators (MMOs) to offer services connecting bank accounts to mobile wallets (Push and Pull), and the expedited assessment of applications from financial institutions for digital payment services.

Liberia's mobile money sector further saw dynamic growth in 2023, with increases in registered subscribers, institutions, and agents, alongside rising female participation. Registered subscribers grew by 0.9% to over 9.3 million, and active subscribers increased by 2.7% to 2.6 million. Female subscribers rose by 4.9%, while male subscribers slightly declined. The number of registered institutions jumped by 80.9%, and registered agents grew by 43.3%. However, active agents decreased by 13.3%. The total volume and value of transactions surged significantly, reflecting increased adoption and confidence in mobile money services. 

Insurance Sector

The Liberian Insurance Sector included 15 licensed insurance companies and 5 brokerage firms. In 2023, one insurance company (Platinum Insurer Incorporated) and one broker (Pro Insurance Brokers) were licensed and are set to begin financial reporting to the CBL in 2024. The sector is dominated by domestic-owned companies, with nine having significant domestic ownership and five with significant foreign ownership. Significantly domestic-owned companies (SDOCs) held 44.39% of the market's assets and 49.52% of its capital. However, significantly domestic-owned companies (SDOCs) generated only 15.7% of the total premium income.

In December 2021, the insurance industry saw an increase in key financial balance sheet indicators compared to 2020. At the end of December 2022, the main financial indicators on the insurance industry's balance sheet showed a decline compared to the same period in 2021. Capitalization in the sector fell by 52%, driven by substantial reductions in total assets and investments, which decreased by 51.5% and 45%, respectively. These declines were primarily the result of the CBL's decision to disallow and discount certain assets after conducting thorough examinations and verifications of some insurance companies. By the end of December 2023, the insurance industry's key financial indicators showed improvement compared to December 2022. Capitalization increased by 17.50%, driven by a 17.73% rise in total assets and a 5.35% increase in investments, mainly due to higher cash, premium receivables, and asset investments. Liabilities grew by 13.45%, and gross premiums rose by 7.63% during the year. Operational and administrative expenses increased by 9.17%, while claims decreased by 17.64%, leading to a significant boost in net income for some companies in the sector.

Pension System

In 2018, the National Social Security and Welfare Corporation (NASSCORP) took over the management of the National Pension Fund of Liberia. During the year that ended in December 2022, Liberia received support from AfDB and the West African Monetary Institute (WAMI) for a Pension Sector Reform project aimed at strengthening the pension sector, expanding coverage to the informal sector, and improving social welfare distribution. The project will also enhance NASSCORP’s capacity and establish a Pension Regulatory Authority. In March 2023, a four-day appraisal mission took place, and the report was submitted to AfDB for approval, with the project set to begin in 2024. The plan includes a sector needs assessment, a roadmap for implementation, and a capacity-building program for pension providers and the proposed Pension Regulatory Authority (PRA).

Contact Details Information of Banks operating in Liberia - 2018