Liberia, the oldest independent nation in Africa is set to get its first stock market after President Ellen Johnson Sirleaf and Milton Weeks, the Central Bank Executive Governor sent draft acts to the senate last week.
The move came nearly six years after the West African nation initiated plans to set up the securities market.
The lack of a middle class with the ability to invest in companies listed on the securities exchange, unlike most African countries is a major reason that has held back the nation from establishing its stock market, Daily Observer reported.
The nation’s financial system is shallow and is vulnerable to the political and economic instability that affects the nation, about 13 years since it ended leaving the country in ruins and a capital market completely wiped out.
Growth of a middle class has also been held back by the high cost of credit and difficulties in accessing financing, especially by small and medium enterprises. Poor infrastructure has also prohibited economic growth.
There have also been an absence of judicial, executive and legislative framework to support the establishment of a stock market.
The nation ‘s major foreign exchange earners are rubber, which makes up about 65 percent of the total exports, followed by diamonds, gold and iron, Trading Economics reported.
Liberia is one of the few nations on the continent that have no stock markets. Others include Ethiopia, which is one of the fastest growing economies in the world, Angola, which is major oil producer in Africa, Gambia and Eritrea, Asoko Insight reported.
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The nation, despite its vast iron, gold and diamond deposits, remains one of the poorest countries in the world. At least 1.3 million live in extreme poverty.
Its economic recovery after years of conflict was hit by the Ebola outbreak in 2014. The epidemic was the deadliest in the nation’s history.
The country’s economic growth fell from 8/7 percent in 2014 to about 5.9 percent last year. Its 2015-16 budget of $ 530 million suffered a $120 million deficit due to the epidemic, Deutsche Welle reported.
It killed at least 4,700 people.
Liberia should protect the stock market from rampant corruption, economic and political mismanagement and over-reliance on commodities like oil and gold, which have inhibited growth of the stock markets in Nigeria and South Africa, the continent’s leading economies, Daily Observer reported.