MBABANE, Swaziland - A severe drought is pushing one-quarter of Swaziland's population to the brink of starvation. A top government official is facing possible criminal charges in the use of foreign aid money to buy a $45 million luxury jet for the king. The inflation rate has jumped to 12 percent.
But despite all the strains on this tiny mountain kingdom, investors in the Swaziland Stock Exchange are keeping their cool.
At the opening of the trading day on a recent afternoon, there is no rush to sell, no rush to buy. It has been more than two weeks since a stock changed hands.
"This is not Wall Street," Mandla Ndlovu, the exchange's spokesman, says dryly.
The trading floor is nothing more than a table and eight chairs squeezed into a tiny boardroom at the Central Bank headquarters in Swaziland's capital. Trading opens at 3 p.m. each weekday with the sounding of a tiny bell that makes a feeble ring like a quarter landing in a tip jar. The country's two stockbrokers then set to work.
Five companies offer shares traded on the market. Their values are updated with erasable marker on a whiteboard mounted on the wall. Most trading sessions last less than five minutes.
Like Swaziland itself, a country about the size of New Jersey, nestled between South Africa and Mozambique, the stock exchange is small and sleepy, one of the smallest bourses in the world. The total value of the stocks is $130 million. Fewer than 500 people invest in the exchange.
It's so small that most of the country's 1 million people are not aware it exists. And why should they? Most Swazis live deep in the hilly countryside, scratching out livings as subsistence farmers, earning about $200 per year. Swazis with any money to spare will traditionally invest it in cattle - not stocks or bonds.
But Swaziland government officials remain optimistic about their fledgling exchange, now 2 years old. When they look into the future, they see the SSX, as the exchange is called, driving the growth of their small country, creating business and alleviating poverty.
"We are trying to target the new generation," says Ndlovu, who travels to elementary schools and universities to educate students about the SSX and terms such as dividends, shares and market capitalization.
"People are not aware of the stock exchange," he says. "But the interest is there."
But to translate that interest into people brave enough to risk buying stocks may be difficult.
Africa's last absolute monarchy, Swaziland is an isolated country whose people have been slow to welcome change. The government is led by 34-year-old King Mswati III, known as the Lion, and his mother, honorably called the She-Elephant. Both are perceived by many of their subjects to have godlike powers.
Cattle and wives
Swazis are likely to visit a traditional healer before visiting a doctor trained in Western medicine. Wealth and status here are measured less by your bank balance or the car you drive than by the number of wives and cattle you own.
"They believe that cattle will take the kids to school, cattle will pay lobola [bride price], cattle will put food on the table," says Michael Matimela, one of the two stockbrokers in Swaziland.
"And shares," he continues, "they don't know what that is. The Swazi man has to wake up in the morning and look at his kraal [cattle pen] and see them moving. Shares don't move. You have to keep a certificate."
There is certainly plenty of risk in the stock market, says Sifiso Nxumalo, Swaziland's other broker, but Swazis must realize that there is more risk in cattle. During the drought that is crippling much of the country, for instance, cattle are dying from lack of food.
"It's an old school of thinking that has to change," says Nxumalo. But many cattle owners can't imagine another place to put their savings.
"I have more money in cows than I do in my bank account," says Gideon Newton Dlamini, a wizened 73-year-old chief living outside Mbabane who balances himself with a cane carved from a tree branch.
Buying cattle has made Dlamini a rich man in Swaziland. It enabled him to marry two wives. He paid 18 cows for his first and 12 for his second. Now he is raising his 40 head of cattle to pass on to his children. Dlamini wasn't aware that his country had a stock exchange. He doesn't plan to invest in it.
Despite such reservations, stockbrokers remain upbeat about the exchange's future.
The Swaziland Parliament is debating two bills that would benefit it. One is a securities bill that would set up a formal set of rules governing the exchange and stockbrokers, making local and international investors more comfortable putting their money here, brokers say. A second bill would require pension funds to invest 15 percent of their assets on the exchange. Now pension fund managers invest in South Africa's Johannesburg Stock Exchange, the largest market on the African continent.
Both bills would provide a huge boost to a market that has remained stagnant. Most days there is no activity with the five companies listed: Nedbank, one of the country's largest banks; Newera, an investment company; Royal Swaziland Sugar Corp.; SwaziSpa Holdings Ltd., a hotel chain that runs the country's most exclusive resorts and casino; and Swaziland Properties Investment Ltd., which owns commercial property, including the country's newest shopping mall. Swaziland Properties generated a 13 percent return for investors last year while SwaziSpa stocks grew 28 percent.
Until last year, the SSX also listed a local refrigerator manufacturer before it went bankrupt, sending the SSX index tumbling.
Most days, however, nothing happens at the exchange. The problem, brokers say, is that investors who own the stocks don't want to sell their shares and the companies are not offering more. And no new companies are being listed.
'We are immune'
So the trading sessions are a stalemate. Even when Wall Street is having a bad day, sending a chill across worldwide markets, Swaziland doesn't panic. Nor do spirits lift when stocks are soaring.
"We are immune," says Nxumalo
The are no bear markets here, he says. No bulls, either - other than the ones grazing by the side of the road.
But Swaziland need not be discouraged. On May 17, 1792, 24 brokers met under a buttonwood tree at what is now 68 Wall St. to sign an agreement forming New York's first organized stock market. From these humble beginnings, the New York Stock Exchange became the world's largest trading house.
"It's a situation that you hope and pray will get better," Matimela says.