The African Development Fund’s Board of Directors recently gave the green light to a $3.9 million grant aimed at bolstering Liberia’s payments infrastructure and systems project. The grant, provided through the Bank’s concessional lending window, was approved on March 17. The primary objective of the project is to enhance Liberia’s payments ecosystem, fostering growth, innovation, and increased efficiency. Specifically, the project will focus on upgrading the automated cheque processing and automated clearing house (ACP/ACH) systems, as well as the real-time gross settlement (RTGS) system, which serve as the backbone of payment processing in Liberia’s financial sector.
The project will also entail the modernization of the Central Bank of Liberia’s main data center and disaster recovery sites. This endeavor is expected to have a positive impact on the Central Bank, government ministries involved in payments, commercial banks, and their customers. Ultimately, all stakeholders will benefit from improved services, faster processing times, real-time transactions, and online administrative access.
The implementation of the project is scheduled to commence in June 2023.
Furthermore, the project will contribute to increased inclusion and regional integration through the implementation of technological upgrades that meet the required standards. This initiative holds particular significance for Liberia as it will directly support the deployment of the proposed National Electronic Payments Switch (NEPS) system, which focuses on the retail market where financial exclusion is most pronounced. With the NEPS project already approved by the World Bank in 2022 and currently underway, the additional project is crucial for improving financial inclusion in Liberia, which currently stands at 44.2% (Findex 2021). Its aim is to extend access to underserved populations, including youth, women, smallholder farmers, Micro, Small, and Medium Enterprises (MSMEs), and rural communities.
The implementation of the project is scheduled to commence in June 2023 and will be carried out in close collaboration between the Central Bank of Liberia and banking and non-banking institutions.
Benedict Kanu, the African Development Bank country manager for Liberia, emphasized the significance of modernizing Liberia’s payments infrastructure and systems. He highlighted the positive ripple effects it will have on the formal financial sector, including increased financial stability and improved private sector development. Kanu further noted that these improvements will contribute to narrowing the financial inclusion gap by providing essential infrastructure support for the World Bank-financed NEPS project. Additionally, the project will position Liberia to participate in the region’s financial integration efforts and facilitate increased cross-border trade, both of which necessitate a robust payments infrastructure.
Ahmed Attout, acting director for the Financial Sector Development Department, underlined the Bank’s financial sector development strategy, which aims to support domestic financial systems in regional member countries and ensure compliance with regional and international financial standards. He stressed the critical role of financial sector development, infrastructure provision, and digital finance support in driving private sector growth, particularly in an increasingly digital world that demands greater inclusivity.
Liberia’s financial sector faces several challenges, including inadequate ICT infrastructure and limited coverage in remote areas. While the existing payments infrastructure, established with the assistance of the African Development Bank in 2016, has served the country well over the past six years, it requires urgent upgrades. This project is poised to maximize the potential for strengthening the financial sector, promoting financial stability, bridging the gap in financial inclusion, and facilitating regional integration