As part of its Liberian Inclusive Financial Sector (LIFS) Project, which is supported by the United Nations Development Program (UNDP), the Central Bank of Liberia (CBL) has launched a LRD 200 million (USD 2.7 million) “Loan Extension Assistance Facility” (LEAF) economic stimulus initiative which targets Liberian microfinance institutions [1].
LEAF will provide local microfinance institutions, credit unions and village savings and loan associations with access to short- and long-term loans for on-lending primarily to women with small farms. CBL expects the short-term interest rates on these “soft” loans, which carry below-market interest rates, to be around 3 percent per annum with rates for long-term loans reaching 12 percent [2].
CBL plans to implement LEAF through CBL’s Investment Committee. The Investment Committee includes representatives from UNDP, United Nations Capital Development Fund (UNCDF), CBL, the Liberian Ministry of Finance, the Ministry of Planning and Economic Affairs, and the Ministry of Gender and Development [4]. LEAF represents the second intervention of CBL to stimulate growth of the domestic private sector of the Liberian economy since 2010 when it injected USD 5 million into the sector at a maximum 8 percent interest rate [2].
By Courtney Snelling, Research Associate
About the United Nations Development Programme (UNDP): The United Nations Development Programme is the United Nations’ global development network. It is an organization advocating for change and connecting countries to knowledge, experience and resources. UNDP is on the ground in 177 countries, working with country governments on their own solutions to global and national development challenges. In 2008, UNDP’s budget was approximately EUR 3 billion (USD 3.9 billion) UNDP’s network links and coordinates global and national efforts to reach the Millennium Development Goals.
About United Nations Capital Development Fund (UNCDF): UN Capital Development Fund (UNCDF) is the UN’s capital investment agency for the world’s 48 least developed countries. It endeavors to create opportunities for poor people and their small businesses by increasing access to microfinance and other forms of investment capital. UNCDF focuses on Africa and the poorest countries ofAsia, with particular commitment to countries emerging from conflict or crisis.
About the Central Bank of Liberia (CBL): An Act of the National Legislature of the Republic of Liberia established the Central Bank of Liberiain 1999. At the end of December 2010, the bank’s total assets amounted to LRD 73.1 billion (USD 1.0 billion) and its total liabilities amounted to LRD 61.1 billion (USD 831.4 million) [8].
[1] “CBL Launches L $200M Loan Extension Assistance Facility”, TheInquirer.com, http://theinquirer.com.lr/content1.php?main=news&news_id=147
[2] Kennedy, George D., “Liberia: CBL Launches L$200M Credit Facility for Microfinance Institutions, Credit Unions, Value Boys, etc.”, Microfinance Africa, January 13, 2012. http://microfinanceafrica.net/tag/loan-extension-assistance-facility
[3] Wesseh, VictoriaG., “Liberia: CBL Launches L $200 Million Extension Loans”, AllAfrica.com, January 13, 2012. http://allafrica.com/stories/201201130994.html
[4] Daily Observer: “No Bank Will Implement CBL’s L$200M, Bank’s Microfinance Unit Clarifies”, by George D. Kennedy, January 20, 2012 http://www.liberianobserver.com/index.php/business/item/239-no-bank-will-implement-cbl%E2%80%99s-l$200m-bank%E2%80%99s-microfinance-unit-clarifies
[5] UNDP Sustainable Livelihoods and Inclusive Financial Sector Annual Work Plan 2011. http://www.lr.undp.org/Documents/PDF/Sustainable_Livelihoods_Inclusive_Finance_Sector.pdf
[6] MicroCapital.org article, September 15, 2010: “MICROCAPITAL BRIEF: United Nations and CARE International Complete Financial Empowerment Training Program for Liberian Women”, https://www.microcapital.org/microcapital-brief-united-nations-and-care-i…
[7] MicroCapital.org article, January 27, 2009: “MICROCAPITAL STORY: Central Bank of Liberia (CBL) Grants Formal Banking License to Liberia’s First Commercial Microfinance Institution, Access Bank Liberia (ABL); ABL Starts Issuing Loans to the Public”, https://www.microcapital.org/microcapital-story-central-bank-of-liberia-c…
[8] Central Bank of Liberia (CBL): “2010 Annual Report.” http://www.cbl.org.lr/doc/annualreports/cblannrep10.pdf
[9] United Nations Development Programme (UNDP), http://www.beta.undp.org/content/undp/en/home/ourwork/overview.html
[10] Report of the Statutory Auditor – Mazars, June 16, 2011
[11] MicroCapital.org article, August 6, 2008: “PRESS RELEASE: International Finance Corporation (IFC) Helps Establish Liberia’s First Microfinance Bank”, https://www.microcapital.org/press-release-international-finance-committe…
[12] MicroCapital.org article, April 28, 2008: “MICROCAPITAL STORY: The African Development Bank (ADB) Approves US $900,000 Investment in Access Holding AG-Sponsored Access Bank Liberia (ABL) and $1m grant to Support Micro-enterprises in Liberia”, https://www.microcapital.org/microcapital-story-the-african-development-b…
[13] MicroCapital.org article, July 10, 2008: “MICROCAPITAL STORY: Central Bank of Liberia Grants License to AccessBank Liberia Limited, a Commercial Microfinance Bank”, https://www.microcapital.org/microcapital-story-central-bank-of-liberia-g…
[14] MicroCapital.org article, August 23, 2008: “NEWS WIRE: Liberia: Waifem Begins Micro-Finance Course Tomorrow”, https://www.microcapital.org/news-wire-liberia-waifem-begins-micro-financ…
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