MuckFlash

Mogadishu, SO -13 April 2009- The last place one would expect to find a glimmer of hope in an otherwise unceasing stream of bad news from financial markets around the world would be Somalia, an East African nation which has lacked a functioning government since the early 90s. However, the Somali Stock Exchange, sub-listed in Nigeria, has shown remarkable resilience in past months as Piracy-based stocks and derivatives soar from all time highs in ransom amounts and payments.

Piracy is big business in poverty wracked Somalia, and groups of investors have long backed armed, sea-faring bands of pirates in the waters off of Somalia in exchange for a commensurate share of the haul. The business angle has become so widespread and competitive that investors have formed shell corporations to legitimize their operations and raise capital through filtered NGOs as well as the occasional IPO. After nearly 15 years, dozens of corporations have issued millions of shares to investors and the public.

The shares, villagers say, have been a boon to many. Iqbal Amram, a retired herder who ekes out a living on a small, dusty patch of land with a tumbledown mud shack, said that his only real livelihood comes from the dividends his few shares of a pirate corporation pay every few months. “It is like they say, the free market drives all innovation,” he remarked.

Indeed, the only Somali shares on the market all appeared to be linked somehow to piracy, despite sporting innocuous names like “Better World Trade,” “Horn of Africa Barter Co.” and “Greater Africa Maritime Inc.” As of late, the combined index of Somlia’s publicly traded companies have soared, rising over %500 in the last three months. As a result, pirate and investor alike are seeing new-found wealth.

Western analysts are surprisingly sanguine about the trend. Michael Astor, an analyst at Citi dismissed the trend, saying “Economics is pretty basic. Rapid growth and optimism fuel value.” Others, however, cognizant of the growing political and military frustration towards Somali piracy, are quick to distance themselves from anything that smacks of modern day Barbarism. Yeule Gebrleaisse, a businessman in Lagos who trades many Somali stocks, laid out the general sentiment: “It is not piracy. It is business, and we are all honest business men.”