The Limited Role of Small Stock Exchanges in Economic Development: A Case Study of Mozambique and Swaziland

Development Southern Africa, Forthcoming

34 Pages Posted: 23 Jul 2008 Last revised: 24 Apr 2009

See all articles by Jenifer Piesse

Jenifer Piesse

University of Stellbosch; King's College London - Department of Management

Bruce Allen Hearn

University of Southampton

Date Written: July 20, 2008


The establishment of a successful stock market in a developing economy can provide a major source of development finance, both channelling domestic savings and attracting foreign investment. But small markets generally fail. Two micro-markets, Mozambique and Swaziland provide an interesting case study to examine the features of new markets in Sub-Saharan Africa that differ in a number of ways, including colonial legacy, membership of the Common Monetary Area and the dynamics of the political economy that defines the links between the citizens, the local elite and the state. In both countries, the operational aspects of the stock exchange are clearly inadequate as a means of promoting international investment. Thus, gains from regional integration initiatives or foreign investment are unlikely as the markets small size and incomplete institutions currently offer limited potential for either domestic or international risk diversification. However, the political economy in both countries is the real barrier to growth.

Keywords: Sub-Saharan Africa, Mozambique, Swaziland, micro-markets, regional integration

JEL Classification: O15, O16

Suggested Citation

Piesse, Jenifer and Hearn, Bruce Allen, The Limited Role of Small Stock Exchanges in Economic Development: A Case Study of Mozambique and Swaziland (July 20, 2008). Development Southern Africa, Forthcoming. Available at SSRN:

Jenifer Piesse

University of Stellbosch

Stellenbosch, Western Cape
South Africa

King's College London - Department of Management ( email )

Virginia Woolf Building
22 Kingsway
London, England WC2B 6NR
United Kingdom

Bruce Allen Hearn (Contact Author)

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

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