JSE Clear gets approval from European regulator ESMA

In a step forward for derivatives, clearing and settlement in Africa, the European Securities and Markets Authority (ESMA) has recognized JSE Clear, the derivative central counterparty (CCP) owned by the Johannesburg Stock Exchange. Stephen Maijoor, Chairman of ESMA’s Board of Supervisors, says in a letter to the JSE: “JSE Clear is recognized as a third country CCP under Title III of Chapter 4 of EMIR.”

This means that the European Union’s regulator recognizes JSE Clear as “equivalent” to CCPs in the EU.

The JSE and the Financial Services Board (FSB) worked together closely to obtain EU recognition, says Leila Fourie, Executive Director of the JSE. JSE Clear’s process to securing ESMA recognition was undertaken in conjunction with the FSB, and successfully finished 2 pieces of work:
• Obtain decision from the EU recognizing that South Africa’s legal framework and supervisory practices are equivalent to those contemplated within the EU regulations
• Obtain EU acknowledgement of the appropriateness of our CCP design and risk management processes in terms of the functioning of the market it is meant to serve.

Fourie commented in a press release on 1 Feb: “This achievement is hugely important for the JSE, our regulator the FSB and participants in South Africa’s financial markets. Today’s announcement means that EU-based market participants that clear trades through JSE Clear will be permitted to continue clearing for investors trading on the JSE.”

JSE Clear is required to apply for recognition by ESMA (the European Securities and Markets Authority), as a result of the fact that the CCP has Clearing Members that are either branches or subsidiaries of European registered entities.

Fourie added: “ESMA recognition strengthens our global credibility and fulfils a key requirement for multinational clearing members operating in the local market. Participation from these multinationals helps to distribute the credit, liquidity, operational and legal risk on our market – instead of concentrating this risk in a smaller number of clearing members.”

Central counterparty - graphic from www.economist.com

Central counterparty – graphic from www.economist.com

SA rules are globally relevant
“It is vital for South Africa that its rules are globally relevant and consistent with financial centers such as the EU. This milestone demonstrates that our CCP is robust and meets global standards in promoting financial stability and reducing systemic risk. The recognition of equivalence is a significant indicator of the rigidity of SA’s market infrastructures, and will aid in attracting international flows to our emerging market.

“The JSE is grateful to the FSB for their contribution in obtaining this major milestone for JSE Clear and the South African markets.”

“Clearing” denotes all “post-trade” activities from the time a securities transaction is executed until it is settled. A CCP is an organization that helps to reduce risk and safeguard against losses that could be incurred by a default of a trading participant when trading on the JSE’s markets.

JSE Clear was among the first in the world to be granted QCCP IOSCO status, i.e. marking it out as a “qualifying” CCP in terms established by the Basel Committee on Banking Supervision in July 2012. CPSS-IOSCO is a global standard for risk management aimed at any organization enabling the clearing, settlement and recording of a transaction.

The decision from ESMA follows earlier equivalence determinations for CCPs in Australia, Singapore, Japan and Hong Kong.

The JSE is one of the top 20 exchanges in the world in terms of market capitalization and is a member of the World Federation of Exchanges (WFE) and Association of Futures Markets (AFM). The JSE offers a fully electronic, efficient, secure market with world class regulation, trading and clearing systems, settlement assurance and risk management.

NAMFISA becomes IOSCO associate member

The Namibia Financial Institutions Supervisory Authority (NAMFISA), the regulator of Namibia’s stock exchange and many other organizations, has been accepted as an associate member of the International Organization of Securities Commissions (IOSCO). IOSCO is the leading international body of securities regulators and administrators and its members regulate over 95% of world securities markets.

Kenneth Matomola

Kenneth Matomola


IOSCO is having increasing impact on African regulators, helping them to work together to advance standards in the national securities markets, including working through African regional associations of regulators such as the Committee of Insurance, Securities and Non-Banking Financial Authorities (CISNA) of the Southern African Development Community (SADC).
NAMFISA’s acting CEO, Kenneth Matomola, said attaining IOSCO membership is a significant step in NAMFISA’s quest to become a respected regulator of the financial industry. IOSCO associate membership enables NAMFISA to gain wider exposure and exchange best practices with fellow regulators from all over the world. “This newly-acquired membership sends a strong message that the authority is respected for its ability to regulate the securities market locally. It indeed speaks volumes of NAMFISA’s place in the global securities community,” he observed.
IOSCO has 3 types of membership. Ordinary membership is open to securities commissions and other governmental agencies. Associate membership is available to other agencies that regulate in an environment where there is an existing national regulatory body. Affiliate membership is available to entities which carry out self-regulatory functions, such as stock exchanges.
IOSCO associate membership gives NAMFISA a seat on the IOSCO Presidents Committee. It is also eligible to become a member of IOSCO Growth and Emerging Markets Committee and to participate in the Africa Middle East Regional Committee meetings.
IOSCO ordinary members listed on IOSCO’s website which are based in Africa are: Algeria’s Commission d’Organisation et de Surveillance des Opérations de Bourse; Central Africa regulator Commission de Surveillance du Marché Financier de l’Afrique Centrale (Securities and Exchanges Commission of Central Africa) based in Gabon; Egyptian Financial Supervisory Authority; Ghana’s Securities and Exchanges Commission; Kenya’s Capital Markets Authority; Reserve Bank of Malawi; Mauritius’ Financial Services Commission; Morocco’s Conseil déontologique des valeurs mobilières; Nigeria’s Securities and Exchanges Commission; South Africa’s Financial Services Board; Tanzania’s Capital Markets and Securities Authority; Tunisia’s Conseil du marché financier; Uganda’s Capital Markets Authority; the Conseil regional de l’épargne publique et des marches financiers of the West African Monetary Union, based in Abidjan Côte d’Ivoire; and Zambia’s Securities and Exchange Commission.
The associate African members are: Angola’s Comissao do Mercado de Capitais; Botswana Non-Bank Financial Institutions Regulatory Authority; Namfisa; and Rwanda’s Capital Market Authority.
IOSCO’s objectives are to cooperate to promote high standards of regulation to maintain just, efficient and sound markets; to exchange information on their respective experiences to promote the development of domestic markets; to unite efforts to establish standards and an effective surveillance of international securities transactions; and to provide mutual assistance to promote the integrity of the markets by a rigorous application of the standards and by effective enforcement against offences.

Funding for African tech start-ups was $186m in 2015

DisruptAfrica_DA-logo-on-transparent-with-tag-small-e1414593297539

Funding for start-up companies in the technology space was nearly $185.8 million in 2015, according to research by website portal Disrupt Africa. More growth is expected in 2016.

According to the data in Disrupt Africa African Tech Startups Funding Report 2015, the top 3 places where tech investors were backing new businesses were South Africa, Nigeria and Kenya, both in number of deals and amount. Most funding went into solar power (33%), followed by fintech (financial services firms using technology – 30%). The report monitors 10 sectors.

It says 125 tech start-ups raised funding in 2015. These were located 36% in South Africa, 24% in Nigeria and 14% in Kenya. Funding to South African start-ups totalled $54.6m, to Nigerian firms $49.4m and Kenyan firms received $47.4m. Other key places for funding included Egypt, Ghana, and Tanzania.

Gabriella Mulligan, co-founder of Disrupt Africa, commented on the website: “2015 was an exciting year for African tech startups. Our data shows the increasing vibrancy of our ecosystem, with more quality tech startups, and more investor activity than ever before. We’re very pleased to make our data available in the Disrupt Africa African Tech Startups Funding Report 2015, and trust it will contribute to understanding and growing the ecosystem.

He co-founder Tom Jackson added: “These are impressive numbers, showing real growth in the amount of funding available to African tech startups, but in reality they are merely the tip of the iceberg. There will have been many funding rounds across the continent that have taken place quietly. But in terms of demonstrating the development of the ecosystem, these figures are an excellent starting point. We expect to see further growth in 2016.”

Disrupt Africa describes itself as “Africa’s startup portal.. a one-stop-shop for all news, information and commentary pertaining to the continent’s tech startup – and investment – ecosystem”. The report provides detailed information for each country, including deals per location, average deal sizes and highlights key deals and is available here for $50.

Also check out the Fintech Africa awards event, due to be held in South Africa this October. fintech_africa_ning_event

Rwanda Stock Exchange expects 3 share offers (IPOs)

Rwanda Stock Exchange

Rwanda Stock Exchange, credit New Times.

Rwanda Stock Exchange, credit New Times.


The Rwanda Stock Exchange is expecting 3 initial public offers IPOs of shares in the coming months, which will bring the total number of equities listed for trading to 10. No details were disclosed, but the East African newspaper reports the 3 are among the most profitable in their sectors. Pierre Celestin Rwabukumba, bourse CEO, told Bloomberg: “We expect three initial public offerings this year. Due to disclosure restrictions I cannot tell you which ones.”
The East African’s Kabona Esiara wrote: “They are a bank where a principal investor is liquidating interests in order to venture into other businesses and a transport company that is seeking to fund acquisition of a modern fleet. A third company involved in logistics is looking for expansion capital. The latter two are classified as small and medium enterprises (SMEs).” The IPOs are said to be at an advanced stage, with the prospectuses going through Capital Markets Authority checks before roadshows in Burundi, Kenya, Rwanda, Tanzania and Uganda begin.”
Davis Gatharaa, managing director at Baraka Capital was reported saying: “2016 should witness increased market capitalisation, liquidity and turnover largely driven by new listings. We believe the Rwanda Stock Exchange offers a bargain hunting ground for foreign investors helped by a very strong dollar.”
IPOs on the RSE previously were Crystal Telecom (owns 20% of MTN Rwandacell) in July 2015, Bank of Kigali in 2014 and beverages firm (brewer) Bralirwa in 2011, launching the equity market. I&M Bank had issued a corporate bond in 2008. RSE statistics showed RWF34 billion ($45.5 million) in trading from January to November 2015. Market capitalization was RWF2.82 trillion ($3.75bn).
The market saw declines with the Rwanda Share Index down 21% but the All Share Index was down 3.9%. and the paper reports that analysts do not expect strong performance this year. Robert Mathu, CEO of the Capital Market Authority regulator, was reported saying: “Weak global commodity prices weakened the economic outlook for most of sub-Saharan Africa. Coupled with the currency bleeding that was experienced by most of these African countries, this led investors to adopt a wait-and-see approach on African stockmarket prices.”
When the bourse was launched the Capital Market Advisory Council said in 2011 that government planned to offer shares in 6 companies on the domestic exchange, including Commercial Bank of Rwanda, now known as I&M Bank Rwanda, and Sonarwa Insurance. The New Times newspaper reported in April 2015 the government is planning an initial public offering of its 19.8% stake in the Rwandan unit of Nairobi-based I&M Holdings Ltd.
In a report on AFKInsider Rwakumba said the bourse is targeting new retail investors: “ We are focusing a lot on the demand side with specific attention on retail investors. We are increasingly getting more and more new investors; in 2015 we had a surge of new investors of 19.2%. We are to keep building on this momentum to entice new investment so that we don’t face challenges in supply and demand sides.”

African securities exchanges returns 2015 for USD investors

Many investors are not looking forward with much enthusiasm to 2016, and USD-based investors had a hard year in Africa in 2015. Out of all the African markets which list returns in USD, only the regional market Bourse Régionale des Valeurs Mobilières SA (BRVM) had a positive return, with a 6% gain over the year to 31 Dec 2015, according to these figures published by Ryan Hoover who writes in investinginafrica.net. By comparison the S&P 500 lost only 0.7% over the year.

Check this website www.african-markets.com

Check this website www.african-markets.com


Source: investinginafrica.net

Source: investinginafrica.net


Performance in all the other markets listed was bad, partly as African currencies crashed against the USD, driven down by deteriorating exports as commodity prices fell. The best of the rest for USD investors were the Namibian and Botswana bourses with -4.3% and -5.9% respectively, better than Johannesburg at -27.9.5% (NAD is linked to ZAR 1 for 1 and the ZAR USD collapsed in Dec with finance minister drama as reported here).
Zambia’s kwacha declined hard and the Lusaka Stock Exchange offered USD a 46.1% fall, slightly worse than Rwanda (-43.2%) and Zimbabwe (-29.4%).
Samuel Kerosi of enjoyable website Kenyan Wall Street looks at performance to local currency investors and points out that only three were up by the measure of their indices: BRVM Composite Index was up 18.5%, the Botswana Domestic Companies index climbed 11.6% and the JSE All Share Index was up 2.4% for the year.
Source: kenyanwallstreet.com

Source: kenyanwallstreet.com


Zimbabwe Stock Exchange is priced in USD and was the worst-performing market in Africa despite not having currency decline, as companies struggle to cope both as they cannot devalue to stay competitive with imports and in the continuing political difficulties.
Kerosi points out that 25 companies in Zimbabwe have negative earnings per share and 6 of the top 10 saw market capitalization down, with Econet Wireless, a great telecoms company, down by 64% in 2015. He is impressed with Botswana’s Sechaba Breweries, an investment-holding company with 60% of the shares in Kgalagadi Breweries (Pty) Ltd., joint shareholder with SABMiller Botswana.
Kerosi’s conclusion: “It has been a really tough year (2015) in the African markets, looking on the bright side valuations have come down and one can be able to find quality companies at good values with a long term view typically 5 – 10 years.”
NOTE: Hoover and Kerosi give very different views on the Namibian Stock Exchange, presumably Hoover is looking at the NSX Local Index, which had a good year, and Kerosi at the NSX Overall Index, heavily influenced by dual-listed South African companies including Anglo-American which operates diamond mines in Namibia.

Mwalimu Bank shares soar as Dar es Salaam enterprise market gains momentum

The market for small and medium size businesses is picking up momentum on the Dar es
Salaam Stock Exchange. Mwalimu Commercial Bank Plc was the fourth listing on the Enterprise Growth Market segment on 27 November, and Prime Minister Majaliwa Kassim Majaliwa spoke at the listing. The share launched at TZS500 ($0.23) after its initial public offer (IPO) and then soared by 40% to TZS700 on the first day of trading before gradually falling back to TZS665.

The IPO also registered a success for the mobile phone trading platform launched by the DSE in August 2015. DSE Chief Executive Officer Mr Moremi Marwa told Daily News that at the end of September, a month after the launch, some 700 investors used mobile phone trading. The paper says that because of the mobile platform, upcountry buyers outpaced Dar es Salaam residents in buying shares in the Mwalimu Bank IPO. It is good step forward for financial inclusion in Tanzania. The IPO was oversubscribed by 24%.

DSE CEO Moremi Marwa, (photo credit 24Tanzania)

DSE CEO Moremi Marwa, (photo credit 24Tanzania)

Previous EGM listings were Mkombozi Commercial Bank (December 2014), Swala Gas and Oil (August 2014, local exploration subsidiary of Australian Swala Energy), and Maendeleo Bank (November 2013). There are four registered nominated advisers to help companies apply to the EGM for listing and to sponsor their listing and compliance, employing a model based on London Stock Exchange’s Alternative Investment Market (AIM).

The EGM was launched in 2013 as part of a successful project backed by the Financial Sector Deepening Trust (FSDT).

The name of Mwalimu bank means “teacher” in Swahili and was also the affectionate honorific title for Tanzania’s founding President Julius Nyerere. The bank is supported by the Tanzania Teachers Union, which has 200,000 members according to this DSE press release.

It has not yet opened its doors as it needed a banking licence approval and to raise capital, before it can establish systems and procure core banking and other systems. CEO Ronald Manongi was reported in The Citizen newspaper saying it will start offering services in May 2016 with a branch at Samora Avenue in central Dar es Salaam and later at Mlimani City. It has a capital base of TZS31 billion.

South Africa – politics affects the market, damaging savings and jobs

Pravin Gordhan (photo enca.com)

Pravin Gordhan (photo enca.com)

Stock exchanges act as a powerful and fast indicator of how the market and the business world view political initiatives. Many believe that the overall market has a wisdom that an individual policymaker or even a group of political leaders cannot expect to have. Of course political leaders are the ones elected and responsible to lead in the interests of the people, but the market is a very useful tool for quick feedback and possible corrective action.

Usually the signal is only given by plunging share prices or rising bond yields/falling bond prices (the same thing). However, last Sunday the Johannesburg Stock Exchange decided to spell out how policy decisions affect not just the stockbrokers, but the whole population, including hitting their savings, their jobs and their hopes. This came after President Jacob Zuma on 9 Dec appointed unknown David van Rooyen as Finance Minister in very dubious circumstances after sacking respected Nhlanhla Nene.

The revolt inside the African National Congress ANC and across the country was also strong. By Sunday night 13 Dec the National Treasury was back in what is seen as safe hands, with the reappointing of a previous minister, Pravin Gordhan. The ZAR currency gained on Monday, climbing back past ZAR15 = USD1, and reaching ZAR14.97=USD1 by this morning according to Reuters compared to ZAR14.43=USD1 before Nene was fired.

We reproduce a statement published by the Johannesburg Stock Exchange (JSE) and its CEO Nicky Newton King earlier on Sunday 13 Dec in full. It indicates how the market affects everyone’s welfare:

IT’ S NOT JUST THE NUMBERS – IT HURTS ORDINARY SOUTH AFRICANS
Says JSE CEO Nicky Newton-King

Johannesburg, 13 December 2015. South African capital markets posted significant losses and saw unprecedented activity following the announcement by President Jacob Zuma on the evening of the 9th of December to replace the Minister of Finance. Investors, ranging from individual retirees to huge pension funds, have seen the value of their holdings plummet. Businesses already under pressure now face increases coming from rising borrowing costs and a weaker Rand which devalued from R14.53 to R15.89 (9.36%) against the USD and from R15.94 to R17.45 (9.47%) against the EUR in the two subsequent days.

Thursday 10 and Friday 11 December 201 saw exceptional trading volumes across most platforms of the JSE:
• Average daily value traded in the Equity Market on those two days, at R47.8bn, was more than double the year to date average for 2015 (R19.9bn)
• Average daily number of trades in the Equity Market on those two days of 589 721 (both of which were record trading days) was more than double the year to date average of 246 338 trades
• The FTSE/JSE Financial15 Index (FINI) dropped 13.36% from 15 600 to 13 515
• The FTSE/JSE Banks Index lost 18.54% dropping from 6 556 to 5 340
• The FTSE/JSE All Share Index (ALSI) dropped 1 456 points in those two days, closing at 48 068 on Friday, down 2.94%
• The FTSE/JSE Top 40 Index shed 987 points over the same period, closing at 43 558 on Friday
• The entire market cap fell R169.6bn from R11.35tr to R11.18tr (1.49%)
• Activity in Equity Derivatives also peaked – value traded on 10 December (R51.1bn) was double that of the daily average of the year and on 11 December (R129.7bn) was 5 times the daily average of 2015
• In the bond market, the benchmark R186 started the week at a yield of 8.66% and closed on 10.40%. By contrast, on 29 January 2015 the yield was 7.055%.

Says Newton-King:

“While the JSE systems were able to handle this unprecedented activity, we should not just be concerned about the immediacy of market reaction but should be mindful of the longer term impact on the financial stability of our economy.

“Market losses put strain on credit extension and interest rates, and raise borrowing costs for companies and individuals. As cost of capital becomes more expensive, this in turn constrains the growth stimulus which we desperately need. The outlook for much needed job creation opportunities diminishes. And higher lending rates make everyday life more expensive for ordinary South Africans. Continued currency depreciation will have a profound impact on fuel prices and on inflation overall, which will hurt companies, small businesses, and individuals.

“We should remember that behind the daily statistics are the life savings of ordinary South Africans which are likely to be negatively impacted. This will put pressure on the ability of people to fund their health and housing requirements, their household budgets, their children’s education and their entrepreneurial aspirations.

“As individuals and as corporates we need to be aware of how we are impacted by the seriousness of this moment and take accountability for how we respond.”

Yesterday and today the markets started to recover. The banking index had fallen nearly 20% and on Monday climbed back 15% but then pared back gains to 8.7% by Monday evening. The yield on the benchmark 2026 ZAR186 government bond, with effects on all debt across the market, was down 101 basis points to 9.37% on Monday morning, but closed yesterday at 9.95% and this morning was at 9.87%, while the JSE’s All-Share Index was up 2% to 49,051.

Reuters reports Investec chief economist Annabel Bishop: “Finance Minister Gordhan has averted the rout, but the damage to sentiment cannot be repaired quickly, and South Africa will continue to suffer under it for quite a while.”

NOTE – PRIME EXAMPLE Markets reflect earnings prospects: It was fascinating to see how the “elephant bond” – Cote d’Ivoire’s previous Eurobond – adjusted its yields with every advance or retreat in the country’s 2010 civil war. It was eventually defaulted on in 2011 and resumed proper payments in 2012, with a very warm response given to the 2014 and 2015 editions, according to Euromoney.

Local bond markets to fore at AfDB workshop

The African Development Bank’s African Financial Markets Initiative (AFMI) is discussing local-currency bond markets this week in Johannesburg, and over 30 countries will be there according to the press release. Key topics include how to develop domestic institutional investors, with experiences shared from across Africa, and updates on gathering data and help to include more countries in an AfDB-Bloomberg bond index.
AFMI runs a helpful financial markets database, available through their website www.africanbondmarkets.org, featuring bond and money-market news and helpful capital market descriptions for different African countries as well as a data portal.
The first day of the workshop, today 30 Nov, covers the database and the African Fundamental Bond Index as well as technical assistance. It includes how to collect accurate pricing data so that more countries can be included in the African Development Bank (AfDB/AFMI-SM) Bloomberg® African Bond Index (ABABI).
Tomorrow, 1 Dec, is open to investment banks, stockbrokers, exchanges and financial institutions. This includes presentations on the ABABI index, an African Domestic Bond Fund, and perspectives from institutional investors.

To participate in the 1 Dec African bond markets workshop please contact afmi@afdb.org as soon as possible.

AfDB launched the initiative in 2008 as part of its strategy to develop Africa’s financial sector. It contributes to developing domestic bond markets through: the African Financial Markets Database (AFMD); and the African Domestic Bond Fund (ADBF).

African Financial Markets Initiative data portal

African Financial Markets Initiative data portal

African securities exchanges and their role in the future

Here are some extracts and paraphrasing from the opening remarks of Oscar Onyema, CEO of the Nigerian Stock Exchange and President of the African Securities Exchanges Association’s excellent 2015 conference, hosted by the Johannesburg Stock Exchange’s warm hospitality. The conference started on 16 Nov and finished the next day.

Trading volumes and structures
African securities exchanges trade multiple asset classes from equities and bonds to exchange-traded funds (ETFs) and derivatives. 23 nations make up ASEA. In 2015 year to date, African exchanges collectively have traded over $325.0 billion in equities, $1.2 trillion in bonds, and $438.0bn in ETFs and others. They have market capitalization of over $1.3trn.

Several African exchanges are demutualized, while others are in the process of demutualizing. The exchanges are becoming active players in the global exchange business, and the conference theme “Evermore” is about sustaining that growth position, and becoming a real platform for growth in the African economy.

The role of the capital market remains a critical one. It is time to ask the tough question: “How we can sustain the positive growth trajectories of our performances as African exchanges, given the globalization of the securities business?”

It is my strong belief that one of the things that Africa needs to sustain its growth is a solid capital-markets ecosystem that will attract investment and unlock the potential that exists on the continent. How do we, as capital market businesses, operate and grow in a sustainable and socially responsible way? I would like this conference to deliver better understanding of: 1) how best to pursue social values, without losing sight of the traditional financial objectives of our businesses; and 2) the correlation between the health of our economies and the value of our capital markets, bearing in mind peculiar strengths that we could leverage individually and collectively as we press forward.

Africa’s strengths
One of Africa’s greatest strengths is its population of 1.1bn people, 200 million of whom are aged between 15 and 24 years, making Africa the continent with the youngest population in the world. The current trend indicates that this figure will double by 2045. African exchanges are already positioning themselves to do a lot more to service the increasingly sophisticated needs of our growing middle class. Our customers will be looking to sustain and grow their wealth, and will be looking to work with us in preparation for the transfer of that wealth. Therefore I encourage all of us as capital market players to ramp up on our efforts, as we prepare ourselves to meet our clients at their points of need.

We have a combined total of just-over 1,600 listed companies, but this number is negligible compared to the actual number of successful companies operating on the continent, or the over 1.5 million businesses registered in Africa.

I propose we find new ways to engage with business leaders in order to communicate more clearly the vital role we play in facilitating long-term financing, mobilizing resources, and directing the flow of savings and investments efficiently within our economies.

Exponential benefits accrue from risk-sharing initiatives. Internationally, integrated stock markets improve resource allocation and accelerate growth by facilitating liquidity. Although profitable investments sometimes require long-run commitments to capital, savers prefer not to relinquish control of their savings, and preferably not for long periods of time. This is where liquidity comes in to ease the investor’s tension. It does this by providing investors with assets that are easily liquidated at any time, while simultaneously allowing firms permanent access to capital that is raised through equity issues.

Exchange linkages across Africa
There is no better time than now to intensify our efforts in ongoing initiatives that foster the advancement of regional integration and cooperation. Sub-regional integration efforts such as WACMI in West Africa, CoSSE in Southern Africa, and EAC in East Africa must be encouraged.

We must also begin to study how to effectively link the entire region. Hence, the African Exchanges Linkage Project (AELP) which is a jointly owned mandate between ASEA and the Africa Development Bank (AfDB), is a step in the right direction. It is aimed at addressing the lack of liquidity in African capital markets by creating linkages across key regional markets to reduce fragmentation and information asymmetry.

All of these efforts to deepen the continent’s markets will aid in pushing Africa’s economic transformation, and enhancing national competitiveness. But we must be careful never to lose sight of the real objective of these initiatives, which is to stimulate opportunities for the investment community, and expose issuers to deeper pools of capital, and a wider community of analysts and investors pools.

Weak corporate governance is often found responsible for many of the corporate failures in Africa. As securities exchanges, we operate powerful platforms through which we can influence and promote sustainable business practices. We must increase our contribution and participation in developing our national codes of corporate governance, by setting strong listing and maintenance requirements, and ensuring adequate disclosure of listed companies’ corporate governance arrangements.

Leapfrogging technology
Africa is becoming known as the continent that leapfrogs traditional stages of growth or development. We have seen this in the telecommunications industry where despite insurmountable challenges with communications infrastructure, the impact of mobile phone technology in Africa has been phenomenal, and is now revolutionizing many other sectors of our economy. When it comes to mobile phone technology, Africans are doing great things and leapfrogging the West, ironically driven by a lack of infrastructure.

Mobile payment systems experienced phenomenal growth in Kenya because many Kenyans did not have bank accounts, but they had mobile phones. Here in South Africa, the innovation of mobile commerce where you can order something on your phone and pick up from a locker is growing in popularity, and the driver for this is the limited number of physical malls. As a result of poor infrastructure in the health space, Africans are yet again turning to mobile technology for health information on platforms such as Mobile Alliance for Maternal Action (MAMA).

This trend is no different in how quickly the continent has embraced innovations in renewable sources of energy. Between 2010-2012, Nigeria’s renewable power production posted the world’s fastest growth, at more than 15% a year, according the World Bank. I therefore call on my colleagues in the capital market space to do no less in the capital market.

Let us be aware of our opportunities and tremendous capabilities and get involved in understanding what emerging technology can do for our sector, from blockchain technology to advancements in cyber security

Africa’s securities exchanges summit next week

Africa’s securities exchanges gather for their flagship conference in Johannesburg from 15-17 November. The 19th African Securities Exchanges Association annual summit is hosted by Johannesburg Stock Exchange. The association ASEA draws together 25 securities exchanges and ASEA President Oscar Onyema, CEO of the Nigerian Stock Exchange, says the theme – “Africa Evermore: Growth for sustainability” — emphasizes that Africa’s capital markets are stable, have huge potential and are growing.

Oscar Onyema, CEO of Nigerian Stock Exchange

Oscar Onyema, CEO of Nigerian Stock Exchange

The association has as objectives to develop its member exchanges and enhance their global competitiveness. Those at the conference are the major players in capital markets, including listed companies, trading participants, regulators, government representatives, technology providers, legal advisors, and institutional investors from Africa, Europe, and Asia. It’s an ideal opportunity to network and exchange information with industry leaders from across the continent.

Capital markets should be the key channel for the massive investment to fuel Africa’s economic growth of the coming 20-30 years, including finance for business, for infrastructure and for a social and development gains.

Onyema says ASEA’s mandate is not just to promote Africa as a sound investment destination which offers better returns than more developed markets but also to highlight that Africa has strong regulatory structures and that the capital markets and policy-makers are committed to transparency and governance as fundamental to a healthy business environment.

Zeona Jacobs, Director of Marketing and Corporate Affairs at the JSE and ASEA Executive Committee Member, says: “ASEA has been successful in attracting capital inflows to key markets in Africa by positioning them as key engines of economic growth and opportunities for business development. The conference highlights the important role its members have in advancing the exchange market and raising Africa’s global competitiveness in this sector.”

Themes and speakers

The conference agenda covers key topics for Africa’s exchanges including
• How the economic health of African countries affect the capital markets, with perspectives from issuers and investors as well as the exchanges
• Role of exchanges as corporate citizens
• Sustainable stock exchange
• Sovereign wealth fund and how they see African exchanges
• Is increasing liquidity and transparency a pipe dream?
• Friend or foe – prop trading firms in Africa
• How do African markets become more influential in shaping the global regulatory environment?
• Challenges and opportunities of commodity derivative exchanges
• Do we need a pan-African clearing house?

Speakers include the leaders and top executives of many top African exchanges as well as global exchanges such as Nasdaq, key banks, international and African stockbrokers, private equity and asset managers, IT providers to Africa’s exchanges, data and information vendors, government officials and leading regulators

Your writer on panel

Your writer is honoured to be sharing a panel talking about the key post-trade sector and also securities exchanges integration: “Does Africa need a need a pan-African clearing house serving all its exchanges across asset-classes?”, moderated by Leila Fourie, Director: Post Trade and Information Services, JSE, with speakers Terry Gibson (External Post Trade Consultant, MillenniumIT) and Selloua Chakri (Head of Market Structure Strategy, MEA, Bloomberg L.P.).