The African Development Bank Group (www.AfDB.org) has granted $400,000 for the Liberia Pension Sector Intervention Project, aimed at increasing pension coverage in Liberia.
This funding is drawn from the Capital Markets Development Trust Fund (CMDTF), a multi-donor initiative managed by the African Development Bank that promotes the development of efficient and diverse capital markets across African nations. The CMDTF receives contributions from various donors, including the Ministry for Foreign Trade and Development Cooperation of the Netherlands and the Ministry of Finance of Luxembourg.
Currently, Liberia's National Social Security and Welfare Corporation (NASSCORP) is the sole pension service provider in the country, primarily serving formal sector public service employees. This leaves a significant gap in coverage for the private sector, especially for informal businesses.
The Liberia Pension Sector Intervention Project will utilize the funding to implement specific reforms within Liberia’s pension sector. This includes evaluating the existing pension system to formulate a national strategy and enhancing the capacity of the pension sector ecosystem, which encompasses both public and prospective private pension operators.
The initiative is anticipated to improve the regulatory environment and foster the development of a domestic institutional investor base, thereby expanding pension coverage and enabling the pension system to attract additional savings for investment, particularly through local financial markets. The project will be executed by the Central Bank of Liberia, which is responsible for overseeing the nation’s financial sector.
Honorable Henry F. Saamoi, the Acting Executive Governor of the Central Bank of Liberia, expressed gratitude for the ongoing support from the African Development Bank in advancing Liberia's pension sector. He emphasized the importance of collaborating with the Bank to implement this significant reform. Mr. Saamoi noted that the Liberia Pension Sector Intervention Project aims to strengthen the country's preparedness for capital market development by establishing a robust investor base and enhancing the legal and regulatory framework governing the pension sector.
Ahmed Attout, the African Development Bank's Director for Financial Sector Development, stated, "We are thrilled to collaborate with the Central Bank of Liberia on this initiative, which is anticipated to create a reformed pension system capable of mobilizing domestic savings. These savings can be directed through financial markets, thereby contributing to the deepening of Liberia's domestic capital markets. This effort aligns with the Bank's objective of fostering the development of efficient capital markets that can effectively mobilize and allocate savings to meet the credit requirements of economic agents and support the continent's growth while minimizing intermediation costs."