Sierra Leone: The Stock Exchange Issue

12 October 2006 at 22:46 | 1078 views

According to the Financial Post of Wednesday October 11, "Sierra Leone plans to sell 36 state-owned companies, including the port operator and airline, to attract investment needed to boost the economy after an 11-year civil war, the country’s central bank governor said. The west African nation will establish a stock exchange in the capital, Freetown, early next year to help facilitate the sale of assets, Governor James Rogers said yesterday." Mohamed Jalloh(photo), one of our regular contributors, takes a look at this piece of news:

By Mohamed Jalloh, USA.

The SL government should be congratulated for finally signaling its intention to bring our country into the modern financial age with its announcement of the establishment of a stock exchange in SL scheduled for early 2007.

However, in the interest of protecting the people of SL from the continuing pillage and plunder of SL’s resources, the key question that begs for an urgent answer is one that should be familiar to anyone who has followed the self-serving recommendations made by so-called international experts, principally from the IMF and the World Bank, to the perennially clueless successive governments in SL. That questions is:

Is it really necessary to "sell 36 state-owned companies, including the port operator and airline" in SL in order to establish a stock market?

The fact that stock exchanges have been established in many countries without the prior sale of state-owned companies gives a clue to the answer to the above question. Clearly, it is a clue of which the clueless government of SL is blissfully unaware. In the hope that the SL government is a victim only of ignorance, I would like to offer it my following humble opinion: That, while there may be a reason for the SL government to sell state-owned companies, the need to establish a stock market is most certainly not one of them — since a stock market can be established without the sale of any state-owned company.

The apparent failure of the government of SL, in general, and the governor of the Bank of SL, in particular, to recognize this elementary principle, points to the reason why so-called international experts have been having a field day, over the past 30 years or so, fleecing the people of SL under color of providing "technical advice" and other forms of "aid" to transparently clueless governments in SL, and their no less clueless advisers. Sadly, it is also evidence that the SL government lacks the indispensable ability to recognize nonsense even when it is presented to it (as so-called international "technical advice".

My humble advice to the government of SL is a simple one, namely: By all means go ahead and set up a stock exchange in SL but you do not have to sell SL’s state-run companies in order to do so. Those are two dichotomous issues which have no necessary relationship to each other — as any objective economist (or, even an elementary course in economics) would readily attest. Finally, be very wary of foreigners masquerading as aid donors who offer you "technical advice" that features the sale of SL’s national assets as a necessary condition for establishing a stock exchange — especially when the most likely buyers of those state-run companies are (you guessed it) foreigners and foreign companies.

And, why, one might ask, would foreigners be the most likely ones to buy the state-owned companies in SL that the government intends to sell? Because, every year since 1979, S/Leoneans have become progressively poorer compared to foreigners. In particular, a S/Leonean who, in 1979, had the same wealth as say, an American — let’s say $1 million — would today have the real equivalent of a mere one hundred and fifty dollars ($150) compared to the American’s still intact $1 million!

And how, you might ask, did a S/Leonean who 27 years had the same $1 million that an American had, end up today being reduced to a pauperous owner of a mere $150 while his erthswhile American equal now towers economically over him with the American’s original $1 million still intact? The one-word answer should be familiar to anyone who is familiar with my writings since 1979: Devaluation.

And, what, you might wonder, is devaluation in SL? As I described it in a published writing in 2001:

"Devaluation in S/L, and in similar African countries, is quite simply, a meticulously disguised catastrophic daylight robbery of gigantic proportions, of an unwitting nation by opportunistic foreigners."

In case you are wondering who was it that advised the clueless SL government in 1979 to devalue SL’s previously strong currency, the Leone, well, the answer is very revealing — and very familiar: It is the very same opportunistic foreigners who are now advising the no less clueless government of SL in 2006 to "sell 36 state-owned companies, including the port operator and airline," because that is the only way to establish a stock exchange in SL!

Which, leads us to a final dispositive question, namely:

Is there no limit to the cluelessness of successive governments in SL, or to their capacity to inflict unnecessary harm on the people of SL who have been the longstanding hapless victims of their own government’s perennial incompetence and corruption?

For the sake of the future welfare of the long suffering people of SL, let us hope that the answer to the above question is in the negative.

Best regards,