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Special Feature

The need for a stock market in Liberia

An economic activity is never truly too efficient and ripped for a nation like ours to establish a stock market.  We can learn from South Africa, Kenya, Nigeria, Ghana and from the West as to how we should go about establishing ours in this country of vibrant and lively business minded people.  Although, our National GDP and GNP; (Gross Domestic Product & Gross National Products) by average, in comparison to international standards, may not qualify our country for such market, if these were the only yardsticks used to determine the viability for the establishment of a stock market. Hence, the question that arises is; were Western countries or our African neighbors qualified in terms of their countries general economic activities before establishing their stock markets? Or were their income level ripped for such markets, when they chose to establish them? Even the great United States’ markets before the establishment of States and Federal laws to govern the activities of their stock markets, were neither qualified nor efficient by current standards at the time of the introduction of national standards and rules governing stock markets activities.

A perspective on the country’s economic and financial markets

During the embryonic stage, it was poultry, livestock, maize and other crops and agriculture products that made up the largest part of the stock markets in the United States of America.  The markets were heavily stratified and were not free of problems, but they served the populace in various regions of the United States, well. Today, Americans, Nigerians, Ghanaians, Kenyans and South Africans, are heavily invested in the stock markets for growth of their investments, or savings for future retirements. They are hugely invested in Stocks, Treasury Bills, Notes, Bonds, Municipal and Corporate Bonds, and Mutual Funds/Money Markets, Options and overall, in Individual Retirement Accounts where some of the investment products mentioned above are traded. Yes! Some of the products indicated above carry minimal risks, while others carry maximum risks, unlike the stocks themselves.  However, as statistics have shown, over the last three quarters of a century, companies that have been properly managed while they grew, their values appreciated, thereby increasing the values of their markets’ shares and that of their shareholders’ or investors’ portfolios. 

Yes! We are ready for a stock-market, and why wait in the first place? In an effort to reduce mass poverty we must focus on strategizing applicable methods that will help the average Liberian accumulate wealth, thereby creating rational exuberance among our people.  Although, wealth alone does not create excitement in people, but it removes a third of the frustrations, boredoms, tensions, extreme dissatisfactions, irrational-anger and world-weariness that create the feelings of national resentment for a government. When most people are happy with their lifestyles and circumstances, the chances of developing rebellious thoughts become extremely remote or non-existent.  They think of how best to increase and share their excitement.  We must create the atmosphere where most citizens will have the opportunity to participate in the creation of wealth by investing in various companies through the purchase of companies’ shares.  Investment in stocks has shown that wealth can be accumulated generously, but gradually overtime, once the companies are growth oriented, well managed and are doing well while the value of their shares appreciates. When the price-per-earnings ratio, commonly known as the PE/Ratio and other prime evaluation factors can be statistically interpreted as positive indicators including other factors that suggest that corporations or companies are being well managed and that they have the potential to expand or acquire other assets that would increase their market value, then the atmosphere is said to be ripped for investments.  There should be no reasons for continuous delay in the establishment of a stock market under said circumstances.

Today, there exist a few dozens of International, National, Medium and Small Business Enterprises that are either licensed as Local or International Corporations, Partnerships, Limited-Partnerships, Micro-Businesses or Small (entrepreneurs) known as Petite-Traders, that have some tax waivers for a period of time in order to allow them develop their full potential for profit maximization momentums. If our citizens are therefore allowed to partake in investing in these companies to become shareholders, they stand the chances of accumulating wealth that will bring about durable gratification and exuberance in their lifestyles as we see in other countries. This process will have positive psychological effects on our citizens as I stated above.   

Isn’t it viably prudent that we now introduce Special Retirement Plans, as Individual Retirement Accounts (IRAs) and Custodian Accounts and then educate our populace about the long term advantage and benefits that these plans would have for them and their children? Retirement Plans are usually tax deferred vehicles for holding investments and they can be established by individuals or by their employers. Minimum balances for the establishment of these accounts or plans can be set by an oversight agency or commission. Plans that could really benefit our average citizens in the category of retirement plans include; Profit–Sharing Plans, Defined Contribution Plans, Defined Benefit Plans, Tax-Deferred Annuity Plans-(403(b)) and Payroll Deduction Savings Plans.  Over the last eight years, market forces in our Liberal Democracy have clearly played a part in defining the stage and pace of economic growth in our Country, why don’t we take advantage of these phenomena?

Rational exuberance should not be a fever well liked by Westerners alone. I believe that it is time that our well established and growth oriented companies go public, in order to have ordinary citizens purchase their shares. For instance, if 150 residents of each one of our 15 sub-political regions, are encouraged to do an initial investment of as little as US$500-$1000, with a plan to participate in direct monthly investments of US$30.00-$50.00 over a period of 10 years, there is potential for such investors to accumulate wealth between US$100,000 to $500,000 as value of their portfolios.  An average Liberian who earns between US$500 to $1,000 per month, may never earn such yields through savings in banks in their life time, but can only do so through active businesses such as real estates, or Real-Estates-Investment-Trust (REIT), stocks investments, or through a profitable merchandise business which is presently, heavily flooded by foreign traders in our Country. Savings accounts are not bad options, but they pay very little interests, which don’t yield enough for customers.  In investment, the rate of returns (ROI) for each investor’s portfolios may differ, base on the individual investor’s timing, style, choices and his or her market savvy.  In fact, it is the well established Lebanese and other foreign businesses that reap the benefit of our citizens’ deposit accounts in banks. They’re often qualified to borrow huge amount of money because of their credit worthiness or connections, unlike our average citizens. Don’t get me wrong, savings’ accounts are necessary as equitable balances and for quick access to cash and they carry limited risks.  Although money markets accounts with brokerage firms entitle the shareholders to access the liquidity of their accounts quickly likewise, they also carry some investment risks.    

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In view of my suggestions and reasons for the establishment of a stock market in our country, let me give a quick analysis of Merchandise Markets which are parts of our Financial Market: In our current economy, markets are not controlled by a single segment of financial institutions nor business-enterprise, neither by the commercial and petty-traders, whose activities overwhelmingly steer the volume of economic activities in and around our country.  It becomes a little challenging sometimes for one to analyze or dissect the efficiency of our markets’ system.  Our markets may not be as efficient as our Western Counterparts, but they serve us well, generally speaking.  All markets bear some similarities in their operational-characteristics. Hence, we may complain here and there, but so do they in the West, especially about unemployment, inflation and about the prices of goods and services or commodities. Although, ours bear some candid similarities in their manipulative nature, which include; the purchase of goods or health-services, real estates, transportation, rent-fees, clothing, food, tuition and fees for our children, to satisfy our daily wants and needs or necessities, using valuation of goods or commodities.

The dissimilarity includes; none tagged produce or goods, the constant negotiations for prices, and the irrational currency exchange rate, especially on the black markets where some petty currency traders and marketers exploit the system without oversight. For instance, in one part of the City of Monrovia, the exchange rate can be as high as $87-$88 LD for a single US Dollar, while the rate can be as low as LD$80.00-$82 in other areas for the same US Dollar. The role of the Central Bank as the National Referee in determining the value, worth and credit rating of our currency seems non-existent.  Hence, what then is the Central Bank’s role in all of these?  It is often left with the client who is requesting for exchange, to negotiate for a better deal.  During my observations, what I found very interesting in simplistic economic similarity, is that when the wholesale or cost-prices of goods or commodities are high for our marketers, they the (marketers) tend to add the extra costs or expense to the sales’ price of their commodities in order to gain maximum profits, thereby passing on the extra costs to the buyers-(which is a common practice in merchandise activity and in some financial-markets). It is unusual but, an acceptable practice in financial economics.  Hence, this circle often creates anxieties among local consumers who may have very little to spend for their daily family needs.  Despite these irregular price movements, the dissimilarity remains an interestingly serious area for additional case study.

What I like to suggest in this medium that could enhance citizens participation in stocks investment for the accumulation of wealth, is that; our National Government should allow some of its controlled Public Enterprises, such as; LTA Liberia’s Telecommunications Authority, Liberia’s Petroleum Refinery Corporation-LPRC, Liberia Electricity Corporation-LEC, Liberia Water and Sewer Corporation-LWSC, National Transit Authority-NTA, LRA, CDA and a few others that have limited liabilities but huge profits/revenue generating potentials, to join other private companies within the confine of our borders, to go public, where established laws or rules can govern their activities. Before a stock market is established in our country, the National Investment Commission can seek local and international grants in order to begin a nation-wide educational campaign to educate our citizenry, regarding the potentials of wealth accumulation through stocks purchases.  We can use our local talents and expertise with limited assistance from international experts to help us put a frame work in place.  When a stock market is established in Liberia, after a serious media campaign, the efforts to enlighten the citizenry for their steady participation would increase and many would become convinced to invest.  We have the advantage to use local media to do additional education of our populace at very low costs.  Because it is cheaper and easier to invest in stocks other than real estate, I believe a serious media campaign will do the job in turning our populace to the desire for stocks investments.

Interestingly, potential investors must be admonished that verbal negotiations are initiated differently and done by third parties called Stock-Brokers or Registered Representatives who discuss bid and ask prices.  In most African markets, face to face negotiations are common place because prices are unknown until the buyer asks. This is however, not the case in the stock markets.  Current circumstances would not permit me to delve into the core of this, but I will do so in my next article.

Negotiations among buyers and petty traders have long become a traditional part of our seller-buyer social-psycho relationships, to the point that every buyer tries to be an expert at negotiations for the little they have to spend. The process is routine, but never boring, because the petty-traders themselves are active and they often create the environment for amusements, during, or followed by these negotiations, as long as the buyer remains alert for some of our common social-deviants, such as; career thieves who have become notoriously sophisticated like their career-counterparts; the-(Armed-Robbers). As emphatically mentioned, I must add that prices are not usually fixed in Africa, as they’re in the West. Unlike ours, Westerners, have to buy more goods or produce in order to get some discounts or sometimes take advantage of big sales.  Sales involve the reduction in the prices of goods or in the percentage of the total costs of the products, which usually lasts for several days or weeks.  While prices are fixed to the items, sales’ prices are affixed to change the cost per item in the stores, malls or supermarkets, so there is no need for extra negotiations as we do in Africa.

Hence, what part does our Public Financial Management System (PFMS) play in all of this? The fundamentals of our Public Financial Management System which is managed or supervised by the Ministry of Finance, should be based on the efficient collection of fees and taxes, management of our national debt, accountability of our expenditures, efficient management of our Government’s Books of Accounts (BOA). The system in short, should be based on good governance, discipline, organizational-networks, efficiency and effectiveness by bringing together theory and practical perspective for maximum productivity.  Our Ministry of Finance and the Ministry of Justice can serve as guiding forces along with the National Investment Commission in helping the system function properly when our stock-market is in full swing.

Before our stock market is established, our Legislature would establish acts, rules, or laws to govern all publicly traded companies, while a special commission with the expressed authority for oversight and to investigate and prosecute wrong-doers will be a good start. The Finance Ministry’s forecasts of economic activity and a detail analysis of our ‘Current Account’, should give potential investors a clear blue-print as to the viability for investment. Firstly, I would suggest that the 1966 Investment code which was amended in 1973, be seriously scrutinized expeditiously by the Legislative Branch of Government with an objective to making such code advantageous to all Liberians including the petty-traders.  During my investigation I observed that there is a huge-guaranteed tax haven for foreign enterprise.  I believe that our Government’s present Investment Incentives Code is too permissive, oversold and unreasonably generous to foreign Investors.


As a post-war transitional economy, Liberia still faces daunting tasks in reporting itself as a fast paced developing economy.  Since the assumption of the Presidency by Madam Ellen Johnson Sirleaf, the onus of proof for economic growth has been her prerogatives and responsibilities along with some of her cabinet ministers who are all members of the National Planning Council/Board (NPC/B).  In reality, one must admit that she has succeeded in numerous areas of national development and capacity buildings, although she appears reluctant sometimes, or seems to look too deep at issues that causes her delay to act on certain projects or issues, when conditions have been ripped to do so.     

We have emerged from failed Administrative eras to a modern and vibrant economic era that requires both praises and constructive critiques about the state of affairs of the impact on economic activity in the life of ordinary citizens in our Country.  Before the military regime of MSGT Samuel Kayon Doe, we saw the Tolbert Regime as it slowly began to fail as a viable economy and political system, when the United States reduced its foreign aid to our country, during a time when the prices of our major exporting resources; rubber, cocoa, coffee and iron-ore, also dropped and the demand for some, dwindled drastically on the world markets, in the mid-70s.  In fact, what exacerbated our problems, were the drastically reduced US political and economic supports that affected the state of affairs of our Economy, and the increased CIA activities in our country, thereby cresting huge tensions that somewhat undermined the Regime and therefore, caused a stall of Fiscal-Budgetary allotments for various programs in our National Economic Development Plan.  The US no longer saw President Tolbert as a fitting leader of Liberia after the April 14th, 1979 rice riot, which left scores of our citizens dead or seriously wounded in the streets of Monrovia.  President Tolbert’s knuckles were tied as he struggled to discern and decipher the good from the bad. His attempts to create a political balance in order to ease tensions and please our ‘country-boys’ did not sit well with the ‘old-white-heads’ of the Grand Thru Whig Party, who saw themselves as the original caretakers of the constitution of this country.    

Before the 15-16 years of our brutal civil turmoil, we also watched a slowly failing economy and a chaotic-political system, which was nearing bankruptcy and collapse under a dictatorial regime that was initially supported by the US Government. The marriage soon fell apart when the CIA’s assessment determined that nearly 50-60% of all US Monetary assistance to Liberia was being misappropriated or stolen.  During temporary but tumultuous peace time, we also witnessed a free-flow of un-accountable caretaker-administrations, until 1997, when our country under a duressed atmosphere, elected a Marxist-Socialist, who never filled nor repaired a single pot-hole in the city of Monrovia while he ran the country as an autocratic, zoomed-micro-manager.  Today, we have a growth oriented but struggling Market-Economy, led my Africa’s first female President, one that has visibly macro sequential objectives for the fulfillment of our National Economic Development Plan.

Our Country has continued to receive surmounting amount of low interest loans, grants and other funds from donors and other International Organizations for different development purposes. Yes! There are minute, but stratified yields from these investments here and there, such as investments in our Security Communications System, Community Colleges, the slow but steady construction of feeders’ roads and health centers in our country, and the plan to do so, is something that I care to note.  However, not much attention is being paid to the issue of agricultural development, with emphasis on RICE production for self-sufficiency in our quest for poverty reduction.

In the rapid development of any emerging economy like ours, self sufficiency in the production of the staple food for such country should be a priority on the national development agenda. We ought to prioritize the production of RICE in our national development plan.  The rapid development of Palm Plantations for business purpose is good on an acceptable level, because such company can also go public in order to enable our citizens’ purchase their shares in the Stock Market. However, I must admit, that I am deeply concern as to how this new found palm-business will profit us best, when most of the soil that could be used for massive sustainable rice production, from which we could benefit through a public enterprise are being used for palm production while we spend between 24-40million US$ annually on rice import.  Such money could now be used for Universities’ or College’s Subsidies to help improve our educational system which is a mess as admitted by our President herself.  If we spend so much money to feed four million people who live on a piece of God’s blessed fertile land in the world, while neglecting our best investment (Education), our hope for sustainable rice development for self sufficiency is being pulled to the back-burner where it will die.  I suggested in two of my previous articles a few months ago, that our Dynamic President, designate a high level delegation to Israel in order for them to negotiate for the re-establishment of (ARGIMINCO), or a new joint venture for rice development corporative, that will help our nation move speedily towards the production of sufficient rice for local consumption and exports. Such rice cooperative can also become a publicly traded company, where citizens can purchase their shares.  If this process is implemented, we will save between $24-$40 million US dollars annually and we will generate instead, between $60 to $90 million US-Dollars, annually, as revenue for the first five years. Subsequent increments will follow as we expand the plan in all our 15 geo-political sub-regions.

Israel by all accounts, has turned the dessert land of hers into a self sufficient food producing nation, by using modern technology and skilled manpower to achieve serious ecological millennium objectives. Why can’t we achieve such, when in fact our ecology or soil for that matter, is more fertile and requires less manipulation than that of Israel’s? It will require less time to develop the manpower and skills needed in order to achieve these objectives in a medium-term development plan for our country. When innovation is encouraged among our people in the area of agriculture or modern farming, they may invent or improve old methods to enhance food productivity in our Country.  These efforts could create employment opportunities, and new found companies that could increase employment and thereby helping to produce food stuff locally that we usually import.

A country that strives to feed its populace and often spends disproportionately to import food for its citizens, when it has some of the world best soil to grow and produce sufficient food in order to feed it citizenry, will find it difficult to achieve major development goals and objectives, while hungry. The old maxims; ‘empty bags cannot stand’ and ‘a hungry man is an angry man’, clearly indicate a very simplistic but factual concept that we should not ignore, because we cannot be successful in developing our people and country when most are hungry and live in abject poverty. Therefore, I conclusively opine that our Government begins the process of brainstorming to determine the establishment of a Stock Market in our Country.  When we teach most of our average-working class and the middle

Class of our country about wealth accumulation through the stock-market as a business alternative to common savings’ accounts, we will create rational exuberance in our people.  As my Pastor often says, “It is well,” I hope so, with our Country and Economy, by the Grace of God (Jehovah).

About the author; Samuel T.M. Dunbar is Director for the Integrated Departments of Human Resources, Planning and Research at the AME-ZION University. He also lectures on Development Planning, Public Financial Management, and Public Personnel Administration. Cell numbers: 0880702909/0776486956, Email: address; samueldunn100@gmail.com/tarnue55@yahoo.com

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