How Liberia plans to recover from Ebola

In Liberia, the number of weekly new cases of Ebola Virus Disease (EVD) has fallen sharply since November 2014, and domestic “aversion behavior” due to the crisis is abating. There is greater mobility of people, as reflected in the reopening of markets and increasing petrol sales. The government is more bullish about the future course of the epidemic and has lifted curfews, recalled furloughed civil servants, and opened borders, and is reopening schools, shuttered since the onset of the crisis.

As the crisis eases, the government is sure to give more attention to engineering a rapid economic recovery. The collapse of economic activities precipitated by the Ebola crisis has been sharp, severe and unprecedented. Although the indirect effects of the illness and related deaths have consumed health care resources and prevented temporary or permanent participation in the labor market, it is the behavioral responses which have weighted most adversely on aggregate demand and supply. This has resulted in a sharp contraction of economic activity and the loss of many jobs, particularly in the agricultural and services sectors.

An ongoing mobile phone survey being conducted by the World Bank suggest that nearly 41% of Liberian household heads who were working in the first half of 2014 reported being out of work in January 2015, with recent job losses concentrated among urban, private sector wage-earners. There is also a disproportionate gender effect: Of those working in the first half of 2014, 60% of women versus 40% of men had ceased to work by January 2015.

Prior to the crisis, the government of Liberia was already deeply concerned by the relatively high rates of joblessness in an economy that is recovering from 14 years of civil conflict. This concern is heightened by the fact that many of the unemployed are youths whose prolonged idleness may pose risks to the peace and security of the country. A recent World Bank policy note, “Liberia Employment and Pro-Poor Growth,” has also shown strong association between employment and poverty.

As Liberia emerges from the shadows of the Ebola epidemic, Liberian citizens are concerned, most immediately, with getting their jobs back or re-engaging in self-employment across various sectors. But many small, domestic businesses and household enterprises are likely to remain closed because owners have consumed working capital and even assets as a coping strategy during the crisis. About one-third of those surveyed in December and January reported having sold assets and sold or slaughtered livestock to cope.

Getting people back to work will be absolutely critical, not just for the economic recovery but also for social harmony. The challenge is how to do this with limited fiscal space, a shallow domestic economy and foreign investors who may need more assurances and time to re-engage. So, where should the government start? What other country lessons are relevant and how can the international community help?

A forthcoming World Bank policy note, “Creating More and Better Jobs in Liberia: Issues and Options” suggests some actions that the government could take to make a difference in the speed at which jobs are created and the quality of jobs created. Such actions include:

• Provision of improved inputs (such as seeds and fertilizer) to encourage current farmers to re-engage, and incentives for new farmers to enter the agricultural sector. Such actions can help to improve the productivity and income of farming households;
• Assistance with mechanical land preparation in cases where the mechanism for labor-sharing has broken down, and labor shortage is a constraint for household farming larger acreage;
• Facilitation of improved access to credit to support the re-engagement and expansion of micro-, small and medium enterprises, including household enterprise; and
• Institution of productive public works on a national scale, linked to rebuilding critical social infrastructure and creating training opportunities.

Even while the government takes action to get the wheels of the economy turning again, it needs to turn a caring eye to the most vulnerable, including labor-constrained and extremely poor households. Experiences in Latin America and elsewhere have shown that well-targeted social cash transfers, even when they are not conditional, can be effective in addressing chronic poverty.

Finally, the Ebola crisis need not evolve into a deeper jobs crisis for Liberia, but proactivity and a clear strategy are required. When, in September 2004, Hurricane Ivan practically flattened Grenada, a tiny island in the Eastern Caribbean, the country’s recovery mantra was “bigger and better!”  Perhaps this is Liberia’s opportunity to adopt its own jobs mantra of “more and better!”

This article is published in collaboration with The World Bank’s Investing in Health Blog. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Errol Graham is a Senior Economist in the Macroeconomics and Fiscal Management Global Practice of the World Bank.

Image: Health workers put on protective gear before entering a quarantine zone at a Red Cross facility.