Archive for the 'Innovation' Category

BRVM bourse aims for specialist mining shares platform

The integrated regional stock exchange for West Africa is working with the miners’ favourite global exchange for raising capital in order to build a platform for listing mining shares. Bourse Regionale des Valeurs Mobilieres (BRVM), based in Abidjan, Côte d’Ivoire, aims to have a dedicated section for mining ready for business by 2018.

BRVM General Manager Edoh Kossi Amenounve told Bloomberg in an interview that the new mining exchange will be open for companies exploring or operating mines in the region. He explained that the BRVM is talking with Canada’s Toronto Stock Exchange (TMX Group) to set up a “technical partnership” between the two bourses and will “take inspiration” from the Canadian mining-exchange model. Discussions may be completed by the end of 2016.

He told Bloomberg: “Mining companies operating in the region only raise funds in foreign currencies.. Some of them have approached us to see how they could raise the resources they need in local currency. Some have even asked us for a dual listing with the Toronto stock exchange, but the regulating framework isn’t compatible at the moment.”

The BRVM links eight West African countries in an innovative exchange, including gold exporters Mali, Burkina Faso and Côte d’Ivoire (Ivory Coast), and the world’s fourth-largest uranium producer, Niger. Many want to boost their mining industries: Burkina Faso is developing new gold and manganese mines, while Côte d’Ivoire is diversifying from agriculture, including cocoa, and aims to develop its untapped mining deposits, including gold and iron ore, according to Bloomberg. The BRVM attracts investors partly because the countries are part of the West African Economic and Monetary Union (WAEMU) and so use the CFA Franc, which is pegged to the euro.

Amenounve said: “Most of the countries of the region have significant mining deposits… The development of the mining sector has been extremely important in the last few years. We want to support this development..  We need local, African shareholders to invest in the mining sector.”

The bourse currently dominated by banks and telecommunications shares. It is amending its listing regulations to accommodated the new mining platform. Currently listing regulations require two years of certified accounts. The BRVM exchange aims to list mining issuers, including new companies who are raising money for exploration.

Karma heap-leach project in Burkina Faso (photo:True Gold Mining)

Karma heap-leach project in Burkina Faso (photo:True Gold Mining)

AfDB and stock exchanges group ASEA sign MoU for capital markets projects

Africa’s leading financial institution, the African Development Bank (AfDB), is pairing with the African Securities Exchanges Association (ASEA) to deepen and connect Africa’s financial markets. The partnership aims to help mobilize more resources to drive growth.
The two will work on projects of mutual interest such as developing financial-markets infrastructure, introducing new products, improving market liquidity and participation, information-sharing and capacity-building. AfDB and ASEA signed a 5-year memorandum of understanding on 11 July. This provides “a collaborative framework for harmonizing and coordinating the efforts”, according to an AfDB press release.
The Bank and ASEA have already started successfully collaborating on the African Exchanges Linkage Project, which they co-initiated to improve liquidity and foster greater investments and trading across markets. This aims to link key regional markets and has proposed Casablanca, Johannesburg, Nairobi and Nigerian stock exchanges as regional hubs, according to project documents.

AfDB and ASEA Executive Committee delegation. (From left to right) Stefan Nalletamby (Vice-President for infrastructure, regional integration and private sector, AfDB), Geoffrey Odundo (CEO of Nairobi Securities Exchange), Oscar Onyema OON (CEO of Nigerian Stock Exchange), Akinwumi A. Adesina (President of AfDB), Karim Hajji (CEO of Casablanca Stock Exchange), Edoh Kossi Amenounve (CEO of BRVM) Photo: AfDB

AfDB and ASEA Executive Committee delegation. (From left to right) Stefan Nalletamby (Vice-President for infrastructure, regional integration and private sector AfDB), Geoffrey Odundo (CEO of Nairobi Securities Exchange), Oscar Onyema OON (CEO of Nigerian Stock Exchange), Akinwumi A. Adesina (President of AfDB), Karim Hajji (CEO of Casablanca Stock Exchange), Edoh Kossi Amenounve (CEO of BRVM) Photo: AfDB

AfDB President, Akinwumi A. Adesina says deepening and integrating Africa’s financial markets to mobilize domestic resources to fund African economies is very important to deliver the Bank’s “High 5s” priorities: Light up and Power Africa, Feed Africa, Industrialize Africa, Integrate Africa and Improve the Quality of Life of Africans (all part of the bank’s 2030 agenda for attaining the global Sustainable Development Goals – SDGs).
He says there are huge pools of capital available in sovereign-wealth, pensions and insurance funds and these can be used for developing Africa through appropriate intermediation and capital-markets products. He called for “increased mobilization of domestic pools of savings and support for small and medium enterprises (SMEs), as they constitute the bulk of Africa’s private sector.”
Adesina pointed to the bank’s progress in financial markets development through issuing and listing local-currency bonds in Uganda, Nigeria and South Africa. The bank has also created African Financial Markets Initiative (AFMI) to support domestic bond markets through the African Financial Markets Database. The bank will soon launch an African Domestic Bond Fund building on the success of the AFDB Bloomberg® African Bond Index, which started in February 2015 to combine the Bloomberg South Africa, Egypt, Nigeria and Kenya local-currency sovereign indices and was expanded in October 2015 by Botswana and Namibia..
ASEA President, Oscar N. Onyema, CEO of the Nigerian Stock Exchange, says the MoU will frame projects focused on the development of exchanges, deepening the stock markets and ultimately fueling African economic growth.

Korea Exchange success story with SMEs

This article summarizes a talk by Honghee Shin, Executive Director of Korea Exchange, at the World Exchanges Congress in March 2016, which highlighted the KRX experience and lessons to be learned.
Building an exchange environment for small and medium-size enterprises and hi-tech companies to raise capital on a securities exchange requires strategic coordination and support by many different government agencies. The Korean Exchange (KRX) has grown to be the world’s third biggest stock exchange for listing and trading SMEs by creating a virtuous cycle in each stage of growth generates cash-flows which in turn fuel other stages.

The original Korea Stock Exchange was set up in 1956 and KRX evolved in 2005 to offer comprehensive front-to-end services. It has KSD (depository) as a 70% owned-subsidiary and also owns 76% of >koscom, a technology subsidiary. It offers a full range of products, trading and market data, as well as the central counterparty (CCP) and it is a self-regulatory organization performing its own market surveillance.

In 2015, KRX had 1,961 listed companies, 8th highest in the world, and traded $1,929 billion of securities, achieving the 10th highest level globally, according to World Federation of Exchanges. The main board is called KOSPI market and it has a futures and options market that was rated 12th in the world.

koreaSMEs160719_diagramvirtuouscycle

It has two boards for SMEs:
• KOSDAQ was launched in 1996, and provides funds for well-established SMEs and “technology-savvy” area including information technology (IT), bio technology (BT) and cultural technology (CT).
• KONEX was launched in 2013 exclusively for SMEs and start-up companies to support their early-stage financing and development through the capital market.

The ratio of market capitalization compared to GDP is higher at KOSDAQ in Korea than any other major SME markets in Asia. In global terms it ranks third among world SME markets for market capitalization and daily trading volume and 4th with 1,061 listed companies. Technology has been the main driver of the market – IT, BT and CT companies made up 68% of the market in 2015, up from 63% in 2005. In particular, biotech has grown its share 4 times and forms 17% of the total market.

KONEX had 24 companies in the third quarter of 2013, but increased that 5 times to 128 listed companies by the end of 2015. Market capitalization is up 8x, and daily average trading value is up 4x over the period. It offers a fast-track “ladder system” which 14 companies have scaled to transfer from KONEX to KOSDAQ.

Much of the success of the exchange can be attributed to the coordinated efforts of Government, the exchange and other stakeholders.

koreaSMEs160719_diagramstakeholders

Key supports from Government include:
1. Tax incentives
– Corporate tax exemption for investing in newly-listed shares(within 2 years)
2. De-regulation for M&A
– Between KONEX and unlisted stocks
– Relieving corporate governance structure
– Waiver of obligation on appointment of external director and full-time auditor
3. Eased accounting standard application
– Exemption of K-IFRS accounting standard.

Concessions offered by KRX are:
1. Relaxation of Listing Requirements
– Lightened listing requirements for corporations with 20% of total investment from angel investors and venture capital
2. Modified disclosure obligation
– Reduction of timely-disclosure
– Exemption of quarter and semi-annual reports
– Mitigation of obligation to submit registration of securities
3. Minimum deposit requirement for investors adjusted from $300,000 to $100,000.

The exchange brings together companies from diversified industries, with a convergence of the high-tech companies that are the driving force of the economy. There is a solid investor base, including active retail investors with ample liquidity, and the exchange offers them a new way to find investment opportunities. The KRX itself offers relaxed listing requirements and less disclosure and maintenance costs. Government offers supportive policies towards gradual de-regulation as well as tax incentives and benefits.

The 2 Korean boards, KOSDAQ and KONEX play a critical role in a virtuous circle of growth and investment. Typically venture capital (VC), angel investors and government (through policies as well as funds) invests into start-up companies. These grow to list on KONEX, where professional investors tend to invest in what re now start-up SME companies, and VC investors can take some funds out to re-invest into fresh start-ups. As the company grows further, it can more to KOSDAQ where often non-professional investors may be interested in what have evolved into established SMEs, and the VCs can take more funds to reinvest into the earlier growth stages. The virtuous circle means that each stage adds momentum to the other stages, fuelling further growth – for the diagram see above.

DFIs hunt long-term gains in African financial services

Highlights of the African Financial Services Investment Conference AFSIC 2016, held in London 5-6 May.

Development finance institutions have made $6.5bn of investments in financial institutions. Here are examples of what they are doing:

Proparco, Sophie le Roy, Head of Banking and Capital Markets: “We are 50% invested in Africa and financial services and banking make up 50% of our portfolio. Our aim is to catalyze private investors, we show you can invest and make profit. We have a careful process, we helped create banks in Mauritania, Benin and DRC and they still exist.”

BIO (Belgium), Carole Maman, Chief Investment Officer: “We have Eur600m under management, Africa is about 40% of portfolio, most of it is invested in financial institutions. We work on smaller transactions, our sweet spot is from EUR 6m+. We work mostly with tier 2 financial institution through microfinance, equity and loans. In countries such as Ethiopia and DRC where many people are unbanked, there will be lots of opportunities.”

FMO the Dutch development bank, Bas Rekvelt, Manager Financial Institutions Africa: “We have been investing in developing countries for 45 years, we have been able to catalyze EUR 1bn into the markets last year. We try to ensure the markets where we work are attractive enough for the private sector. Our portfolio is 25% Africa, spread between financial institutions, energy and agriculture.”

SIDA, the Swedish International Development Cooperation Agency, Christopher Onajin, Loan and Guarantees Partnerships & Innovation: “Our role is to give money and guarantees, covering credit risk and market risk. Our Africa portfolio is $135m, and we encourage banks, microfinance and others to push them to lend to under-served sectors.”

DEG – German Development and investment company, Peter Onyango, Investment Manager, Financial Institutions Group, Africa: “We have about 50 years of emerging markets expertise and Africa is a particular focus. We see more countries becoming bankable. Internally our risk appetite is improving, we see opportunities in more countries. We see opportunities in growing insurance and the nascent leasing markets, which will improve. There is a lot more in fintech. A setback for Africa is an opportune time for long-term investors, including DFIs and private investors.”

Exchange trends from World Exchange Congress 2016

A couple of interesting statements from speakers at the excellent World Exchange Congress 2016, happening 22-23 March at Bishopsgate in London.

Exchanges – back to the information coffee house
Stu Taylor, CEO of Algomi: Fixed-income trading was dominated by banks who use voice trading and support it with their balance sheets. Most banks and their clients prefer this way and are not naturally going to switch to putting limit orders through the exchanges. We try to see how we can help with parts of the transactions, we worked first with the regulated Swiss exchange to put technology components at banks and that can help them sometimes with their trades, the exchange can help them find different counterparts, or with missed trades or, when they are struggling to complete a deal, the exchange can make suggestions. We suggest actions into the existing workflow, rather than trying to change the workflow. Exchanges can connect information sources so the exchange is the place to see what’s going, it can offer “bond dating”, trying to match buyers and sellers into a transaction.

Historically the technology focus for exchanges has been on execution, but now the innovation is that the exchange is about the information itself. Technology is shrinking the world, we used to talk about 6 degrees of separation in the world. Technology such as Facebook has made that number closer to 3 degrees of separation. Exchanges are back to the origins of exchanges as the coffee shops, finding a place to know someone who knows someone. Information and pre-trade are where the next waves of innovation for exchanges are going to come from.

Exchanges role in banks' bilateral bond trading, source www.algomi.com

Exchanges role in banks’ bilateral bond trading, source www.algomi.com

Can technology create liquidity?
Ganesh Iyer, Director of Global Product Marketing at IPC Systems: “Technology has become a facilitator of liquidity. Uber has no taxis but it provides taxi “liquidity”, Airbnb has no rooms but provides accommodation “liquidity”. Technology does not create liquidity on its own but it brings together market participants and that leads to liquidity. In the capital markets it can bring very diverse market participants together, for instance a mutual fund seller with a diverse “buy-side” community including hedge funds, retail, etc.

Move over-the-counter (OTC) trading onto exchanges
April Day, Director, Equities, Association for Financial Markets in Europe: “There is always a need for keep some balance, some trades are not suitable for exchange trading, there is still a time when investors choose to trade off exchange for reasons such as not wanting to share market information, reduce costs, less disclosure, etc.

Sergio Ricardo Liporace Gullo, Chief Representative EMEA BM&FBOVESPA; The Brazil market has reached a big harmony, we have survived many crises and we have a sophisticated system offered by the exchange which offers central clearing and makes all parties’ lives more efficient and offers better use of capital.

Keisuke Arai, Chief Representative in Europe of Japan Exchange Group: The Japaese experience is that it’s important for the exchange to strike the right balance between market efficiency and investor protection.

Will Interswitch be Africa’s first $1bn tech “unicorn”?

Nigeria’s digital payments and payment card giant Interswitch Ltd could become Africa’s first tech “unicorn” or technology company valued at over $1 billion. Private equity firm Helios Investment Partners (majority owner) is preparing to sell and Citigroup Inc are hired to handle the sale, which could involve an initial public offer (IPO) and listing on the London and Lagos stock exchanges.
Website TechCrunch reported that Interswitch has 32 million customers for its “Verve” chip-and-PIN cards and its Quickteller digital payment app processed $2.4 billion in transactions. It processes most of Nigeria’s electronic bank, government and corporate transactions.
A subsequent report from Bloomberg says Helios paid $92 million for a 52% stake in 2010.
Techcrunch contributor Jake Bright (Twitter @JakeRBright, co-author of The Next Africa: An Emerging Continent Becomes a Global Powerhouse) reports that Interswitch CEO and founder Mitchell Elegbe told him no final decision has yet been made and they are also mulling the option of a trade sale.

Mitchell Elegbe CEO Interswitch (from www.naij.com)

Mitchell Elegbe CEO Interswitch (from www.naij.com)


Bright’s Techcrunch report also cites Eghosa Omoigui, Managing Partner of EchoVC, a Silicon Valley fund investing in African start-ups: “They’ve already selected the ibankers and will likely go public sometime between Q2 to Q4 at (or close to) a $1 billion dollar valuation–roughly two times revenues,”.
Bright points out that there are strong tech opportunities for ventures focused on digital commerce and payments, and cites research by Crunchbase that VC investors put $400m into African consumer goods, digital content and fintech-oriented startups. Helios and Adlevo Capital back ventures such as MallforAfrica (e-commerce) and Paga (payments).
Although Kenya has the spotlight still, because of the runaway success of Safaricom’s M-PESA product, which has 13m customers and generated $300m in revenues for Safaricom in 2014, consumers in Nigeria are projected to generate $75bn in e-commerce revenue by 2020. See this McKinsey report on future consumer spending trends in a youth-driven market.
Interswitch – motto “bills aren’t fun but payments solutions can be” – is still building digital finance market share in Nigeria and in 2014 bought Kenya’s Paynet and also has operations in Uganda, Tanzania and Gambia. The IPO could support plans to expand into more countries – Cameroon, Democratic Republic of Congo and Ghana were mentioned in an earlier Bloomberg article.
Elegbe, age 43 years, founded Interswitch in 2002.
Bloomberg reports that if this goes ahead, it will be one of the few private equity exits at a valuation of over $1 billion. It also cites Bain Capital’s $1.2bn exit from South African retailer Edcon’s private label store cars in 2012, sold to Barclays Absa unit. It says increasing use of e-commerce worldwide makes payments-processing industry a “structural growth market”.
The London Stock Exchange has more than 120 African listings.
In its 2010 press release, Helios described the company: InterSwitch provides shared, integrated message broker solutions for financial transactions, eCommerce, telecoms value-added services, eBilling, payment collections, 2 and also administers Verve, the leading card scheme in Nigeria. The Verve card, which is currently issued by 16 out of the 24 banks in Nigeria, is the first and only chip-and-pin card accepted across multiple payment channels including Automated Teller Machine (“ATMs”), Point of Sale (“POS”) terminals, online, mobile and at banks. InterSwitch has been at the forefront of the development and growth of the epayment sector in Nigeria which is evidenced by its unique position of being the only switching and processing company connected to all banks in the country as well as over 10,000 ATMs and 11,000 POS terminals. In addition, InterSwitch is the leading processor for Mastercard and the market leader in merchant acquiring/POS, a segment which is still emerging and has potential for tremendous growth in Nigeria. Babatunde Soyoye, Managing Partner and Co-founder of Helios added: “InterSwitch is a Nigerian success story having been led by a superb management team and benefiting from the foresight, innovation and support of its founding shareholders, and a supportive regulator in the Central Bank Nigeria.”

Global community heading to World Exchange Congress 22-23 March

Momentum building fast ahead of the key event for securities exchanges worldwide, the World Exchanges Congress, now in its 11th year and back in central London from 22-23 March.

This is the key gathering where more than 300 members of the global exchange community get together from all continents to share trends and to hear from experts and bourse leaders. Topics of interest in the fast-changing world of established and emerging trading venues regulated exchanges include “new customers, new revenues and new partnerships”.

For more information, check the website here.

The World Exchanges Congress was launched in London in 2005 and has been hosted in Istanbul, Madrid, Doha, Monaco, Dubai and Barcelona. CEOs from virtually every exchange and trading venue in the world have attended. In 2010, the event expanded to look at technology opportunities and challenges and there is strong participation from chief technology officers (CTOs) and other top executives with a focus on trends and innovations.

In 2016, the congress continues to be seen as the unofficial AGM of exchanges and it is the most significant date on every exchange executive’s diary. It gives bourse leaders the opportunity to harness the latest innovations, overcome their biggest challenges and be inspired to drive their organisations forward.

The gathering will focus on the most critical future trends affecting exchanges and changing the exchange landscape, including cyber-security, crowd-funding, bitcoin, big data, crypto-currency and post-trade automation. Core topics running through the programme are the growth of financial centres, market integrity and finding ways to succeed through innovation.

Confirmed speakers are CEOs and other leaders from securities exchanges and other trading venues around the world as well as from the World Federation of Exchanges. They will explain their successes and challenges driving into new partnerships and revenue opportunities including commodities, derivatives and FX, regional expansion, the trading landscape under Europe’s MiFID II directive, opportunities for automation, over-the counter (OTC) trading on exchanges, distributed ledger/block chains, attracting more listings, crowdfunding platforms, data and index revenues for exchanges, post-trade models, innovation pitches, latest developments in central clearing, cyber security and finding new customers and new partnerships.

The conference has a strong tradition of formal and informal networking. It continues to be the key place where exchanges come to meet their peers and colleagues, benchmark their organizations and share ideas. Interactive exchange-led roundtables in 2016 mean that this year’s event will be no different.

For more details and to book your attendance, please head to the conference website.

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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

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.

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