Inefficiencies in the Transport Sector: Evidence from Liberia

The goal of this project is to study and understand the inefficiencies of the transport sector in Liberia, and give policymakers the tools to tackle them.

In West Africa, land transport prices are among the highest in the world (World Bank, 2009), and many markets are still isolated. In those markets, the first impact of high transport prices is high prices of imported commodities. Secondly, high transport prices exacerbate possibilities for producers in those isolated markets to access bigger markets. Those two effects combined impede growth of local economies.  

To understand high transport prices in Liberia, the researcher carries out a randomized controlled trial. Managers and drivers of freight transport companies operating in Liberia are interviewed every month, to follow the evolution of these companies through time and capture changes in transport prices and costs over the year. In addition to the monthly interviews, the researcher is installing GPS trackers on the trucks of these companies.  These trackers will allow the companies to monitor the drivers. In turn, data from the GPS trackers will allow the researcher to measure more precisely the costs of the firm, in particular the quality of roads around the country. In a complementary way, the survey records information on the commodities they transport, the origin and destination of trucks, the prices they charge, the average speed of the truck, etc. Data collected includes both prices charged by the intermediaries - the trucking firms – and the costs they incur. Collecting data over time will give a unique data set on transport costs.

Today, Liberia is rebuilding its economy once again after the civil war that has ended in 2003, after more than ten years of violence. In October 2017 Liberians will face their third elections since the end of the war. While most Liberian wish for a peaceful transition, trust in the government and its institutions is low. In this context, transport prices are an essential issue. With a low local production, Liberia is highly dependent on international trade. Commodities are imported in Monrovia, the capital, and shipped throughout the country. High transport prices result in high commodity prices, even for the staple food, rice. Food security is essential to the stability of the country, and transport prices have a direct impact. By attempting to understand the cause of high transport prices this project may be key to inform policy in Liberia and other developing countries.