MFI Report

Liberia is in the process of reconstruction. With 12 years of instability concluded, Liberians are returning to their homes and starting anew. There they have begun to find peace, but few resources to rebuild their lives. Liberia’s infrastructure, both economic and social, was largely destroyed during the civil war and is only now being restored. Over 76% of the population lives below the poverty line and the country’s human development index places it among the lowest in the world. While reducing the living standards of its people, the Liberian civil war also decimated the tools by which it can rebuild itself. This is especially true of the financial sector, where the system of credit unions and commercial banks was forced to significantly reduce services and retract outreach. As a result, returnees and internally displaced persons arriving with few assets of their own and host populations who are already impoverished lack the capital necessary to restart agricultural or business activities. In this situation, providing access to financial services has become essential to help Liberians increase their income and to facilitate the economic recovery process.

Liberty Finance has been established as the microfinance answer to Liberia’s reconstruction, and as a means of reintegration for returning refugees, IDPs and resident populations in major business centers. ARC currently manages Liberty Finance as a department of its main operations, but has established it as a separate institution so that it can specialize in the provision of financial services and avoid being perceived as a relief organization. Liberty Finance began operations in 2005 and currently operates in Monrovia through two branches, in Kakata and in Gbargna. Liberty Finance plans to expand intocontiguous counties, doubling its portfolio each year. By 2009, Liberty Finance will strive to serve at least 15,000 clients in at least five counties. Liberty Finance’s portfolio expansion will be accompanied by an institutional transformation. After managing the program directly for two years, ARC will register it as a local for-profit company. Through this incorporation, ARC will be aligning Liberty Finance’s institutional structure with its commercially oriented products and services. In addition, through its demonstration effect, Liberty Finance will serve as an example of best practice microfinance in Liberia, spurring the development of the sector as a whole. Cacher