The whole of Africa, the world’s second largest continent, has not yet been able to establish a stock exchange that comes near the effectiveness and fame of the stock exchanges of New York, London, Frankfurt, Tokyo and other global financial centers. Why?
We could have done so in Nigeria, with all its petroleum wealth and agricultural potential, and South Africa, with all its mineral wealth, industrial prowess and Africa’s strongest and most vibrant and outstanding agricultural productivity.
Two problems have prevented the Lagos and Johannesburg stock exchanges from rising to global respectability and power—first, economic and political mismanagement; and second, corruption.
Since Nigeria discovered oil in the 1960s, successive governments forgot about agriculture and relied almost exclusively on petroleum as the mainstay of its foreign exchange earnings. That was a big mistake, the same one that Zambia under its first president, Kenneth Kaunda, made after independence in 1964. Why? The Zambian government, relying on its immense copper wealth, like Nigeria, forgot about agriculture. When in the 1970s the price of copper suffered a tumultuous decline, Zambia immediately went into a terrible recession. The country, which had heretofore been agriculturally self-sufficient,
especially in its staple, maize (corn), was forced to start importing maize from the rebel colony Rhodesia, under the ultra-racist Prime Minister Ian Smith, who in 1964 declared unilateral independence from Britain. The Organization of African Unity (OAU, now African Union) immediately slammed economic and political sanctions on Rhodesia, making it unable to export to any part of Africa except South Africa, which was then also a racist minority regime. However, because of the terrible economic and financial dilemma Zambia was in, the OAU granted it exclusive permission to import maize from the rebel colony next door, to save Zambians from hunger.
Why is the South African rand not strong enough to empower the country’s stock exchange? The country gained its liberation in 1994, following the 1990 release of Nelson Mandela from 27 years imprisonment. The landslide victory of Mandela’s African National Congress (ANC) propelled him and the party into undisputed national leadership. But what has it done to his pristine legacy, created by the eminent, even saintly stature of Nelson Mandela? The new national leadership has since sunk the country into economic and political mismanagement and corruption. The use of over US$25 million of public money on the improvement of President Jacob Zuma’s private residence alone brought the country into national and international disrepute. This has come with serious political consequences for the ANC and the country itself. For the first time, the ANC lost very heavily in the municipal elections in several places, including the capital Pretoria and the financial capital, Johannesburg. All of this has given the Johannesburg Stock Exchange not just a hiccup, but also pneumonia.
We do not wish to recall what Time Magazine said in its cover story in 1975: “In Africa, things always go backward.”
Now Liberia, Africa’s oldest independent republic, whose riches in rubber, iron ore and timber could have undertaken the pioneering effort, at least in West Africa, to start a stock exchange, is just now trying to put into place legislation for the establishment of one. Behind this daring undertaking are the nation’s
President Madam Ellen Johnson Sirleaf and Central Bank Executive Governor Milton Weeks. The President last week sent to the Liberian Senate the draft Acts in this connection.
But legislative, executive and judicial prudence and reliability are serious underlying factors that underpin an effective and viable stock exchange. Do we have it?
In addition, how can we develop a Liberian stock exchange when the lion’s share of the Liberian economy is in the hands of foreigners, especially the enclave of Lebanese, Indian and other foreign businesspeople? Governor Weeks was asked this question when a team of reporters and editors conducted an exclusive interview with him last Thursday.
He responded by saying that in order to establish a viable stock exchange, we need to have a Liberian middle class that has the means to invest in companies listed on the stock exchange. Right now there are not many Liberians who can do this, but the number can grow if Liberians are afforded the opportunity to participate in lucrative contracts that will put money in their pockets.
Ah! Governor Weeks was yet unborn when the persistent and rigid exclusion of Liberians from the business class started, especially with the Open Door Policy enunciated by President W.V.S. Tubman and the 1940s. This exclusion has continued until this day. Successive Liberian administrations have favored foreigners over Liberians in the issuances of contracts of any kind. It was probably not Tubman’s intention that this should happen, but what he and successive administrations have failed to do is to initiate a deliberate policy to develop Liberian entrepreneurs and do everything possible to bring them into business. It is most unfortunate that the most highly educated and well-traveled Treasury Secretary, Charles D. Sherman, who worked for the all-powerful Tubman, was not able to do this.
Today we have a government, headed by another highly educated leader, President Ellen Johnson Sirleaf, who was herself also Finance Minister, but has done more than any other government to further entrench foreign businesspeople as the economic and financial powerbrokers in the country.
We challenge this young, patriotic CBL Executive Governor, Milton Weeks, Liberia’s most experienced banker, to think of other creative, more workable and more expeditious ways to empower Liberians to develop, sustain and meaningfully participate in a viable Liberian Stock Exchange. We cannot wait for another generation before we create a Liberian middle class. By that time, the poverty and powerlessness of the people might have driven us into another war.