Archive for the 'Mauritius' Category

Conference: Pensions and Alternative Investments Africa 15-16 March

How fast-growing pensions can transform African economies

Africa’s pension and institutional savings industry is crossing the threshold into a major growth path. Channelled appropriately, they can transform Africa’s business and investment landscape and boost economies and savings.

Institutional savings – pension, insurance and other funds – are emerging as transformative forces for Africa’s economies. Industry leaders and others will discuss it at AME Trade’s Pension Funds & Alternative Investment Africa Conference (PIAFRICA), to be held in Mauritius from 15– 16 March.

The theme is “How can we leverage pension and investment funds for the development of Africa?” Pensions in 10 African countries were tallied at $379 billion in assets under management (including $322bn in South Africa). It is forecast that pension funds in the six largest sub-Saharan African markets will grow to $622bn in assets by 2020 and to $7.3 trillion by 2050.

The aim of the PIAFRICA conference is to debate whether the environment is being created for these funds to go into productive investments that will ensure their members get good returns and that contribute effectively to Africa’s growth. PIAFRICA will bring together the leaders of pension funds and institutional investors, policymakers, regulators, capital-markets, private equity and other stakeholders and is endorsed by the African Securities Exchanges Association (ASEA)

Discussions will focus on maximizing Africa’s pension fund and institutional investor opportunity, and will revolve around the following topics:
• Key trends, challenges and opportunities for Africa pension funds, Insurance, mutual and social security funds
• Africa’s growing funds and their potential to develop capital markets
• How to achieve long-term benefits through investing in infrastructure and other alternative assets, including real estate
• Private equity as an investment avenue for pensions
• For and against more latitude to invest across African borders?
• Best practices for sustainable growth and trust in funds
• Capacity building and support tools
• Technology, fund administration and member services
• Country profiles: African pension funds

Top speakers confirmed to date include:

  • Doug Lacey, Partner, Leapfrog Investments
  • Eric Fajemisin, Chief Executive, Stanbic IBTC Pension Managers
  • Mr PK Kuriachen, Chief Executive, Financial Services Commission
  • Ernest Thompson, Director General, Social Security & National Insurance Trust
  • Krishen Sukdev, CEO, Government Pensions Administration Agency
  • Richard Arlove, CEO, Abax Services

For more visit For media accreditation and interviews contact Barbora Kuckova, Marketing Manager, AME Trade Ltd, Tel: +44 207 700 4949 Email:

Africa IPO round-up

A roundup of some recent initial public offers (IPOs) of shares on Africa’s stock exchanges to raise capital

In early October, MTN launched plans to sell up to 35% of shares on the Ghana Stock Exchange. Ghana’s Securities and Exchange Commission Director General Adu Anane Antwi confirmed they had started the listing process and were working on the prospectus but no timeline had been given. According to local reports, MTN received its 15-year 4G licence in 2015 after spending $67.5m and on condition that it lists. It hopes to raise up to $500m.
MTN Nigeria is also working on plans for an initial public offer (IPO) of shares on the Nigerian Stock Exchange in 2017 which could raise up to $1bn. Nigeria is among several African governments encouraging telcos to list on local bourses and listing is among conditions to settle a record NGN330bn ($1.1bn) fine for failing to disconnect 5.1m unregistered subscribers. Nigeria contributes a third of sales and profit for the Africa’s biggest phone company, which is listed in Johannesburg with market capitalization of ZAR212.8bn ($15.3bn) in early October.
Listings and capital-raising momentum has been maintained on the Nairobi Securities Exchange. Deacons Kenya is the first listed fashion retailer, after joining the Alternative Investment Market Segment (AIMS) of the NSE on 2 August. CEO Muchiri Wahome said the extra funds were to fund expansion into towns with “a vibrant middle class” across Kenya, spurred Kenya’s rapid and ambitious devolution and setting up 47 counties under its 2010 Constitution. Deacons is also eyeing opportunities in neighbouring Rwanda and Uganda. It will also help existing shareholders who want to sell. The retailer listed about 123m shares at an opening price of KES15 ($0.15) each, but by early October the price had slumped to KES8.55.


Nairobi centre (credit

Nairobi centre (credit

In June, leather and shoe retailer Nairobi Business Ventures, which operates the brand KShoe, had become the fifth listing on the NSE’s Growth and Enterprise Market Segment aimed at smaller businesses. It was listed through introduction and valued at KES118m ($1.2m). Previous 2016 share issues included Longhorn Publishers in May. In June power generator Kengen succeeded in the Kenyan bourse’s largest rights issue, raising KES26.4bn ($262.1m) by offering 4.4bn new shares at KES6.55 each, with a 92% subscription rate. Kengen has projects to generate another 700MW of power, of which 605MW is geothermal.
However, Fusion Capital had to cancel its IPO despite extending twice after only getting 38% uptake and four investors for its KES2.3bn offering and failing to meet the minimum threshold.
The Johannesburg Stock Exchange had its second private equity listing. Universal Partners raised R1.3bn ($93.7m) in an IPO which was only open for 4-5 August and started trading on the Alt-X market on 11 August. The company was registered in Mauritius in April and also listed on the Stock Exchange of Mauritius. Its mandate is to invest in properties across Europe, at £10m-£30m ($12m-$37m) each and it aims to start investing within six months. The IPO was for 72m shares at R18.07 each. Several companies aiming to raise capital for African and international investments have dual-listing on the Mauritius and Johannesburg exchanges.
Liberty Holdings is likely to follow up its Kenyan IPO success with a South African Real Estate Investment Trust (REIT) called Liberty Two Degrees in December. This will include some ZAR6bn of its existing portfolio, including iconic malls around Gauteng, and ZAR4bn of new money. As in Kenya, the property investments are managed by Stanlib.
West Africa’s integrated regional stock exchange, Bourse Regionale des Valeurs Mobilieres (BRVM), based in Abidjan, Côte d’Ivoire, plans to build a platform for listing mining shares and raising capital locally. The exchange is talking with Canada’s Toronto Stock Exchange (TMX Group), a favourite bourse for early-stage mining entrepreneurs. BRVM General Manager Edoh Kossi Amenounve says it could open by 2018 and will be for companies exploring or operating mines in the region. There is likely to be a waiver to the usual requirement for 2 years of trading history. The BRVM links eight West African countries, including gold exporters Mali, Burkina Faso and Côte d’Ivoire, and fourth-largest uranium producer, Niger.
Egypt’s Minister of Investment Dalia Korshid says the Government aims to raise up to $10bn over the next three to five years with IPOs of government-owned companies in the oil sector but will start with restructuring state-owned electricity companies.

Mauritius is a trusted base for Africa funds

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

Mauritius is the top base for private equity funds investing into Africa, says JP Harrop Head of Sales for private equity fund administrator Augentius: “Many of larger Africa-focused LPs (limited partners) insist on vehicles being Africa domiciled, its either Mauritius or South Africa.”

Sunil Benimadhu, Chief Executive of the Stock Exchange of Mauritius: “We are busy positioning ourself as an attractive capital-raising platform for focused Africa-oriented ventures. We are aligning our strategy, as vibrant international financial centre for Africa and other emerging regions.
“Also Mauritius as a jurisdiction has signed bilateral investment promotion and protection agreements (IPPAs) with number of countries in Africa and elsewhere, mitigating some of political risk. We already offers a wide value chain of services for investors
“We are now looking at addition value-add services to the international investor. We are positioning the Stock Exchange of Mauritius as an attractive capital-raising, trading and settlement platform for issuers. We have set up a multi-currency capital raising, listing, trading and settlement platform. We allow issuers looking at Africa and elsewhere to raise money internationally, structured in Mauritius, issued in any of 4 international currencies (USD, EUR, ZAR, GBP), trading and settlement can happen in any currencies, positioning ourselves as a risk-mitigation platform for exposure to African currency.
“Another innovation, we created a platform for listing and trading of depository receipts. So a Kenyan company listed on the Nairobi Securities Exchange can raise in KES, but it can use Mauritius platform to issue depository receipts to raise funds in USD.”

Paul Cunningham, Chief Financial officer of Helios Investment Partners
“The big advantage from an investor perspective is the strength of the rule of law and the idea that if you follow the legal process, the final court of appeal is UK Privy Council. Mauritius is tried and tested and gives investors a great degree of comfort that they are investing through good banks, fund administration, management companies and others.”

Top performances for USD investors at Africa’s stock exchanges

Malawi came out as Africa’s top-performing securities exchange for USD-based investors over 2013, with a strong 62.4% return over the year to 31 December. According to data published by the excellent website,, 8 out of 13 African exchanges surveyed beat the 29.6% return achieved by the key US S&P 500 equity index.
Other top performers for USD investors included West Africa’s regional securities exchange Bourse Régionale des Valeurs Mobilières (BRVM) which covers 8 countries. Ghana Stock Exchange gave 44.8% return, the Nigerian Stock Exchange was close behind with 44.6% and Kenya’s Nairobi Securities Exchange scored 43.7%.
Worst performers were the Namibian Stock Exchange (-2.6%) and the South Africa’s Johannesburg Stock Exchange (JSE) with a return of -9.3%, both strongly affected by the decline in the exchange rate of ZAR currency against USD.
Prospects for African exchanges continue to look good with many African economies expected to continue strong growth in coming years and increasing deal interest. However, changes in quantitative easing in the US could lead to cash withdrawals from emerging and frontier markets including Africa.
Liquidity is a major challenge for many exchanges, according to the data by Ryan Hoover of InvestinginAfrica. Zambia’s Lusaka stock exchange only traded $0.7million of African equities a week, while Malawi and Uganda only achieved $0.8m each and Namibia $1m. Ghana was at $3.5m a week, just behind Abidjan-based BRVM which traded $4.6m, while Mauritius managed $5.7m a week, Botswana $6.2m and the Zimbabwe Stock Exchange $8.5m. Most liquid exchanges in the list (which does not include the Egyptian Exchange) include Nairobi averaging $37.1m a week, Nigeria at $106.8m and the JSE at $3.5 billion of equity trading a week.
Although Hoover lists the Dar es Salaam SE as trading a creditable $10.7m a week, a news report in the Tanzania Daily News say turnover jumped 5 fold to TZS252.3bn ($155.9m) in 2013, up from TZS50.9bn in 2012, which is equivalent to $3m a week. The paper quotes DSE’s CEO Moremi Marwa saying: “The DSE outstanding performance demonstrates the increased activities coupled with education campaigns geared at enhancing awareness that gradually made the market more vibrant”. However, the article notes there was a single transaction for TZS78.5bn ($48.5m) in Tanzania Breweries (TBL) in the third week of December 2013 as 48 deals between the International Finance Corporation and local investors which boosted local ownership and may have influenced the figures.

For the full table, check here:

Impact Exchange (iX) gets closer to launch on Stock Exchange of Mauritius

A partnership between the innovative Stock Exchange of Mauritius and social enterprise Nexii is making great progress towards setting up the Impact Exchange (iX) board on a globally recognized stock exchange. This will enable businesses that have social impact to list debt and equity securities, as allow impact investment funds to list. According to a report on, so far 6 companies have gone through the iX board listing process and the board expects to start trading in the third quarter of 2013.
SEM is a member of the World Federation of Exchanges and one of platforms for trading debt, equity and derivatives, and it can also trade and settle in many currencies, including USD, GBP, Euro, Mauritian Rupee. SEM is regulated by the world-class Financial Services Commission of Mauritius and has automated trading and settlement services. It is a recognised stock exchange by Her Majesty’s Revenue and Customs in the UK, and an approved stock exchange by the Cayman Islands Monetary Authority. SEM’s data is live on all major international data vendors – including Bloomberg, Thompson Reuters, Financial Times, Factset and I-Net Bridge – provided significant global access for listed companies and investors alike.
Nexii was created by Tamzin Ractliffe, a South African pioneer in impact investing marketplaces. The new marketplace is aimed at the retail market, so that any investor will be able to buy and sell shares not just qualified specialist investors. Ractliffe initially set up a platform for unlisted securities 12 years ago. In 2009, she worked with the Rockefeller Foundation to bring together a group of social entrepreneurs/impact investors interested in creating social stock exchanges and marketplaces. She spent 18 months researching the market and, in May, 2011, she received formal regulatory approval from the FSC to launch the iX.
For all of the 6 companies that will launch the iX, this will be their first listing. correspondent Anne Field quotes Ractliffe: “Going to the market for money is not something they’re used to. The process of encouraging companies and getting them to understand the value of being part of a marketplace – that’s been quite a lot of work.” To be eligible for listing, companies need a clear social or environmental mission and need to have in place a reporting system for non-financial impact. The also need to work with intermediaries, known as Authorized Impact Representatives (AIRs), who are accredited to NeXii. Nominated Impact Advisors help the social enterprise during the listing process. Once the company is listed, Impact Verification Agents work with the business to make sure it meets ongoing reporting requirements and audits impact reports. Ractliffe says she’s accredited a handful of impact advisory firms so far.
The process can be costly and Ractliffe says she is discussing creating a technical assistance advisory fund that would help finance the cost of the listing process with “a number of development financing institutions”. This fund would also have a financial and impact return.
The new stock exchange was launched in May 2011 at the first Social Capital Markets (SOCAP) Europe Conference at the Beurs van Berlage in Amsterdam – the site of the creation of the capital markets where the first stock was traded in 1602.
According to the NeXii website: “We believe that this board is a powerful tool for facilitating the flow of investment capital to social businesses. The iX represents the next generation of stock exchanges and how these established financial institutions can help transform the capital raising opportunities available to social businesses. The iX provides mission protection for listed social businesses. This means that your reputation as a social business is maintained even though you are issuing public securities. The iX is fully committed to all stakeholders in the impact capital market and it is an effective platform to coordinate information, build intermediary activity and enable analyst coverage of impact investments. The iX is how we connect social businesses to public capital and mainstream investors to change.”

SADC stock exchanges work together towards links, shared skills and better visibility

The 10 stock exchanges of the Southern African Development Community (SADC) are working together to increase the effectiveness of their markets. The Committee of SADC Stock Exchanges (CoSSE) has agreed to concentrate on 6 priority areas in support of regional moves to more efficient capital markets.
The stock exchanges will explore ways to use technology to link their trading and order systems and work together to ensure clearing and settlement systems align with global standards adopted in April. They are working closely with SADC institutions to support development of regional systems, including payment and will boost visibility of trading data and enhance their joint website (, launched in April by the JSE and I-Net Bridge. The bourses will also pool resources to accelerate training and skills development for capital markets staff.
CoSSE members are Botswana Stock Exchange, Malawi Stock Exchange, Stock Exchange of Mauritius, Bolsa de Valores de Moçambique, Namibian Stock Exchange, South Africa’s JSE Ltd, Swaziland Stock Exchange, Dar es Salaam Stock Exchange of Tanzania, Zambia’s Lusaka Stock Exchange, and the Zimbabwe Stock Exchange. They met on 25 June in Gaborone, Botswana in a meeting convened by CoSSE with support from SADC Secretariat.
“Stock exchanges have their roles cut out in each of our economies to augment our governments’ efforts to grow national economies for the greater good and as part of the SADC region’s struggle for growth to escape poverty,” says Mrs Beatrice Nkanza, Chairperson of CoSSE and CEO of the Lusaka Stock Exchange. “They are the channel for long-term risk capital, which is urgently needed for the region’s businesses, infrastructure providers and even governments. They also encourage saving and investment. CoSSE members are working closely together to support SADC initiatives and to make individual markets even more effective”.
CoSSE was set up in 1997 as a collective body of the stock exchanges in the Southern African Development Community (SADC). It promotes co-operation and collaboration between member stock exchanges and is resourced by a Secretariat, supported by the JSE. SADC defines CoSSE’s role in the Finance and Investment Protocol and other policy documents and CoSSE has links to ministerial and senior treasury bodies and also works closely with the Committee of Insurance, Securities and Non-Banking Financial Authorities (CISNA) and the Committee of Central Bank Governors (CCBG).
CoSSE had set up three working committees to implement six business plans, prioritized from the initiatives identified in its Strategic Plan 2011-2016. These are:
1. Legal and Secretariat working committee – chaired by Geoff Rothschild of the JSE. This is responsible for formalizing and resourcing the Secretariat, and for continuing and improving liaison with CISNA and other SADC organs.
2. Market Development working committee – chaired by Vipin Mahabirsingh of the Stock Exchange of Mauritius. CoSSE has been developing models for inter-connectivity between automated trading systems at some or all member exchanges. The working committee will help member exchanges ensure their clearing and settlement systems comply with new global standards and support regional initiatives.
3. Capacity-Building and Visibility working committee – chaired by Anabela Chambuca Pinho of the Bolsa de Valores de Moçambique. This will liaise with member exchanges, regulators, stockbrokers, investors and others to develop and coordinate training courses. It will also enhance the new CoSSE website, help members to upgrade their own websites and to ensure their trading data and company news are disseminated internationally.
Progress will be guided by an Executive Committee, consisting of CoSSE Chairperson Mrs Nkanza, CoSSE Vice-Chairperson Gabriel Kitua (CEO of the Dar es Salaam Stock Exchange in Tanzania) and the three working committee chairpersons. The strategic plan was developed with assistance from FinMark Trust.

For more information contact
Beatrice Nkanza, CEO Lusaka Stock Exchange, tel +260 (1) 228391 or email nkanzab [at]
Gabriel Kitua, CEO Dar es Salaam Stock Exchange, tel +255 22 2135779 or email gabriel.kitua [at]
Pearl Moatshe of CoSSE Secretariat, tel +27 11 5207118 or email pearlm [at]

First global company lists on Stock Exchange of Mauritius

The first offshore company was approved to be listed for trading on the Stock Exchange of Mauritius (SEM). The company has a Global Business Licence Category 1, which is more stringent than GBL 2, and the listing is in line with a new Chapter 18 of the regulations. The Financial Services Commission of Mauritius licences global business sector companies.
The listing of the ordinary shares of Evisa Investments Limited was approved on 28 February for the SEM’s Official Market. Evisa is a holding company and its primary investment is in Cannon Assurance Ltd, a company incorporated since 1967 in Kenya. Evisa has 1,000,000 Ordinary Shares of US$5.45 each in issue. Its main objective is to provide its shareholders with dividend income and long-term gain through expanding and diversifying its investments.
Chapter 18 addresses specific requirements for corporations holding a GBL 1 licence and certain types of debt instruments targeted to special categories of investors, including “expert investors”, as defined in the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008.
According to a press release, the listing of GBL 1 companies is in line with SEM’s internationalisation strategy, and fosters the development of synergistic links between the Global Business Sector and the Stock Exchange of Mauritius. It also fits with the overall objective of positioning Mauritius as a jurisdiction of substance.
The SEM was incorporated in Mauritius on March 30, 1989 under the Stock Exchange Act 1988, as a private limited company responsible for the operation and promotion of an efficient and regulated securities market in Mauritius. Since October 2008, the SEM has become a public company, and over the years the Exchange has witnessed a significant overhaul of its operational, regulatory and technical framework to reflect the changing standards of global stock markets. Mauritius is well poised to become a leading base for funds investing into Africa from all over the world, including from India and China and there is potential for more listings.
SEM is today one of the leading Exchanges in Africa and is a member of the World Federation of Exchanges, the South Asian Federation of Exchanges, the African Securities Exchanges Association and the Committee of SADC Stock Exchanges. SEM is an Approved Stock Exchange by the Cayman Islands Monetary Authority and a “Recognised Stock Exchange” by Her Majesty’s Revenue & Customs in UK.
Evisa is a public company limited by shares, incorporated on 16 May 2002 and licensed by the FSC to operate as a GBL 1 company. The company secretary and registered office address of Evisa is International Management (Mauritius) Limited, Les Cascades Building, Edith Cavell Street, Port Louis.

Stock Exchange of Mauritius aims to be global centre for listing funds

The dynamic Stock Exchange of Mauritius ( is pushing ahead with a wide range of activities aimed at building its role as a secure base for international funding transactions and an African alternative to international listing venues. It is moving to becoming a multi-product exchange aimed at the international market, through rapid development from its origins as an exchange focused only on the domestic market.
According to the website: “In the years to come, the split of listings on SEM is expected to overwhelmingly consist of international funds, international issuers, specialized debt instruments, Africa-focused Exchange-traded funds and other structured products. As SEM also aspires to emerge as a capital-raising platform for Africa-focused investments routed through the Global Business Sector, the SEM platform will growingly (sic) be used to channel investment flows from SA/Europe/Asia into Africa and from USA/Europe into Asia.” Mauritius combines good regulation with flexibility and has been a key base for funds including private equity funds investing into Africa and into India.
The bourse is aiming for a wide range and growing numbers of issuers, players and investors, increasing the breadth and depth of the Mauritius market and integrating the Mauritius financial services sector within the international financial system.
It made major changes to the Listing Rules (early 2010) to align them with the government’s Collective Investment Schemes Regulations 2008, positioning SEM as an attractive venue for listing Global and Specialised Funds, in line with the strategic shifts. The Listing Rules are more flexible to reflect the specific attributes and characteristics of the specialised funds to be listed. SEM aims to be platform of choice for listing a wide variety of funds such as Specialised Collective Investment Schemes, Professional Collective Schemes Export Funds, Global Schemes as part of diversifying product offerings and emerging as an international exchange. The management also commits to aggressive timing in processing listing applications and a competitive listing fee structure. In May 2011, SEM introduced Chapter 18 in the SEM’s Listing Rules, to cater for the listing of specialist companies and specialist debt instruments, targeted at qualified investors.
It is one of the African leaders in multi-currency trading and (since 2010) can trade and settle equity and debt products in Euro and GBP. From June 2011 it was the first exchange in Africa to list, trade and settle equity products in USD.
It supplies real time data through top global vendors such as Thompson Reuters, Financial Times and Bloomberg (since early 2010). The data coverage by global vendors is a powerful marketing medium to enhance SEM’s visibility internationally and put the exchange on the radar screen of a wider spectrum of international investors, thus attracting more foreign investor interest on our market. Mauritius is one of the few African exchanges to be connected to Bloomberg and Thompson Reuters real-time. Growing interest from international investors has prompted index and data providers including Standard & Poors, Morgan Stanley, Dow Jones and FTSE to include SEM in new indexes recently launched to track the evolution of key frontier emerging markets.
Over the last 10 years, the Mauritius Bourse has attracted strong foreign investor interest, generating positive investment inflows into many listed companies. 2010 was a record year for net foreign investment inflows. “For 2011, we are already stepping up our efforts via international conferences and roadshows, to place the SEM on the radar screen of institutional investors who are keen on frontier emerging markets that are well regulated and adhere to international best practice”, says the website.
SEM also has ambitions to contribute more broadly to the development of the Mauritian economy and to help grow capital market activities nationally and throughout Africa.

Highlights of recent history
SEM became a full member of the World Federation of Exchanges (WFE – in November 2005. This is a high standard and shows that SEM is in the top rank in terms of stringent standards and market principles required to be accepted to this status by the WFE, which sets the standards for registered securities markets worldwide. The standards are recognized by industry, regulators and supervisorss. The WFE membership helps ensure that foreign investors play a growing role – “in a typical year, foreign investments represent 25–35% of trading activities on our market” according to the website.
The Development & Enterprise Market (DEM) was set up in 2006 This is the market for small and medium-sized enterprises (SME’s) and newly set-up companies with sound business plans and showing growth potential. Companies can use the advantages and facilities of an organised and regulated market to raise capital for growth, to improve liquidity in their shares, to obtain an objective market valuation and to enhance their corporate image.
Since March 2010, the SEM was designated by the Cayman Islands Monetary Authority (CIMA) as an “Approved Stock Exchange” by virtue of its membership of the WFE for the purposes of CIMA’s Mutual Funds Law, Banks and Trust Companies Law, Insurance Law, Companies Management Law and Securities Investment Business Law. This raises SEM’s profile as a well-structured and properly regulated exchange and enhances SEM’s position as an attractive listing venue for global and specialised funds.
From 31 January 2011, SEM has been designated by the United Kingdom tax authorities, Her Majesty’s Revenue and Customs (HMRC), as a “recognised Stock Exchange” under section 1005 (1) (b) Income Tax Act 2007. This means that securities admitted to trading and listed on the Official Market of the SEM will meet the HMRC interpretation of “listed” as set out in section 1005 (3) (a) and (3) (b) Income Tax Act 2007 and for Inheritance Tax purposes. This designation confers potential benefits such as permitting UK pension schemes to hold securities listed on the Official Market of SEM, giving companies and funds listed on SEM access to a larger market of sophisticated, well-capitalised investors. The designation reinforces SEM’s attractiveness as a listing venue for global funds and specialized products. Securities listed on the Official Market of the SEM may be held in tax advantaged Individual Savings Accounts (ISAs) and Personal Equity Plans (PEPs) by UK investors. Holders of debt securities satisfying the Eurobond exemption and listed on the Official Market of the SEM are exempted from withholding tax on distributions underlying these debt securities. Inheritance tax advantages may accrue to UK holders of securities listed on the Official Market of the SEM.

Wind of change blows world markets, African stock exchanges unruffled

I have the honour to be published on the opinions section of the Royal African Society website and the article can be seen along with their excellent blogs here. I also reprint the article, which is meant to spark debate, and I welcome your comments – is it time for change and what is the way forward?

“The wind of change” was Harold Macmillan’s famous 1960 phrase about Africans moving to political self-determination. Half a century later the world’s biggest securities exchanges are worrying who will survive a hurricane of globalization, technology and competition, but some of Africa’s capital markets still seem sheltered from the economic winds of change.
The giants of securities trading are slugging it out in a wave of mergers and acquisitions and London Stock Exchange (LSE) chief executive Xavier Rolet said: “In five years there will be three, four international exchange groups with global distribution capabilities”.
In the world of mega-bourses the LSE launched a £4.3 billion merger with Canada’s TMX Group of exchanges but a “Maple consortium” of Canadian financial institutions has launched a hostile bid, seeking to block the marriage. New York’s NYSE Euronext and Germany’s Deutsche Börse want a $9.5 bn union, but US stock exchange NASDAQ and its partner IntercontinentalExchange are offering $11.3 bn to snatch the New York bride. NASDAQ is reportedly worth $5.7 bn and worried it may become a takeover target if it stays single. Many other leading exchanges are busy with strategic transactions.
Africa however has not seen much change at least in the last decade. Some of Africa’s stock exchanges are making a few operational changes, but structural transformation is not on the agenda. The continent has a couple of world-class stock exchanges – in 2010 South Africa was rated the world’s best-regulated capital market – and three or four better exchanges with enough liquidity for international and big local institutional investors. The rest of the continent features a small regional exchange and more than 15 national stock exchanges where activity could drop to a few deals a day and liquidity is too small for the market to work efficiently or provide scope for minimum transactions for international investors. Some don’t even open their doors every working day.
Stock exchanges and securities markets evolved worldwide as the most efficient way to channel capital from savers to entrepreneurs, governments and others who can use it most productively, i.e. profitably. Savers with capital are more than eager to invest billions of dollars into Africa, dubbed the “final growth frontier” for its vast opportunities and favourable pricing. Meanwhile in Africa, entrepreneurs and governments are calling for billions in capital to build roads, rail, power, water and telecommunications/IT infrastructure up and down the continent and to transform farmlands, build industries and hopefully improve livelihoods sustainably through business.
Nationalist politics and comfort zones are among the factors holding back African securities exchanges, which have traditionally been seen as national institutions. Sovereignty has been more highly prized than liquidity and efficiency. In 2009 South Africa’s JSE Ltd sought to acquire a stake in the Stock Exchange of Mauritius (SEM) after two years of talks, but regulators blocked it. Nationalism about stock exchanges is not just an African concern, it is currently in the news in Canada and Australia.However, now technology is available to transform exchanges without losing national regulation or denting pride.
Some African exchanges are improving their own operations fast. The two NSEs – the Nigerian and Nairobi stock exchanges – have taken stern measures to improve governance, regulation and transparency. In Nigeria this included a morning in August 2010 with armed police on the Lagos trading floor after regulators fired the Director-General. Other exchanges such as Mauritius Stock Exchange (SEM) are noted for continuous improvements and innovation. However, only the Egyptian Exchange, the JSE (Johannesburg Stock Exchange) and SEM have attained the exalted membership of the World Federation of Exchanges.
In some countries trading in debt is improving faster than equity markets. Kenya’s NSE launched effective automated bond trading, backed by much improved settlement, and trading volumes and liquidity are soaring. The Government is responding with a deft series of issues that balance the domestic market and stretch it with long-dated 25- and 30-year bonds. Better maturity in the national fixed-income market enables lenders to offer locals long-term housing and other finance with paybacks over decades rather than a few years. Electricity company Kengen, telecoms operator Safaricom and others have raised hundreds of millions of dollars through bond issues, many aimed only at local savers. The overall effect on the economy is likely to be huge.
But change is coming slow to some African exchanges where liquidity is too small and action too slow. International investors complain that many don’t have enough trading to accommodate the minimum buy or sell amounts required and they lament the quality of market and business information and transparency. Coupled with the operational problems and uncertainties that dog local and international businessmen in many African countries, some are still “off the map” for investment.
London, New York and other international stock exchanges benefit if companies and bond issuers seek listings and cross-listings internationally in order to get closer to investors and sources of capital and because efficient marketplaces make their capital raisings more attractive to investors. London has a tradition as the world’s capital marketplace and the LSE’s Main Market lists 18 equities for trading that focus on Sub-Saharan Africa. In 1995 the exchange created the Alternative Investment Market (AIM) as an international marketplace for smaller, growing companies seeking growth capital, including early-stage and venture-capital, as well as more established companies. Sub-Saharan Africa scores 55 out of 3,000 listings, mostly mining firms, but also farming, finance and machinery.
NYSE Euronext Inc says trading in 16 African equities listed on its New York and European stock exchanges has boomed. Stefan Jekel, managing director for Europe, Middle East and Africa, says main activity stems from South Africa but interest in Africa is growing: “The volume (number of shares) traded has increased by factor of 12 over the last ten years to 7.9m shares, and the value is up by a factor of 21 times to $204m per day”.
London is to the fore when it comes to international Eurobond issues as African countries rush to issue sovereign debt and benefit while world interest rates are rock-bottom. Interest is also growing in African derivatives such as Exchange-Traded Funds (ETFs) available on London, New York and other international markets and one or two African markets. NYSE says the number doubled in 2009 to ten ETFs, six in Europe and four in New York, and they have over $1bn in assets.
It is an historic opportunity for Africa’s capital market structures. However much national exchanges improve, they need radical restructuring to create liquid and more efficient markets or they will be blown off the map by the winds of change.
Kwame Nkrumah (1909-1972) and many others transformed the continent driven by their vision of a mighty Africa that grew strong by unshackling the borders that colonial powers had drawn on maps. The African Union is founded to achieve regional and economic integration for Africa to take its rightful place in the world. Capital markets have an opportunity in that technology and proven models exist for African stock exchanges to pool trading while still maintaining national exchanges and regulation and being adaptable to meet local requirements.
Sunil Benimadhu, President of the African Securities Exchanges Association and CEO of SEM said in November 2010 that world investors see the continent as “a very promising investment destination with tremendous present and future growth potential”. African countries have achieved growth rates exceeding 5% in recent years after embracing fundamental structural reform programmes. The growth is set to continue but it must be fuelled with capital, skills and improvements in the investment and business climate.
African capital markets have an opportunity and a challenge.

Tom Minney is a consultant, speaker, financial journalist and editor of the blog

Giant growth foreseen for African stock exchanges over 10 years

African exchanges could grow dramatically in both market capitalization and turnover, following the explosive trends already charted by the Indian and Chinese markets. This was the view of Sunil Benimadhu, President of the African Stock Exchanges Association (ASEA –, speaking at an African investment conference organized by stockbroker Securities Africa ( in London today (14 March).
According to his projections, by 2020 leading African exchanges including Nigeria, Egypt, Kenya, Botswana and Mauritius could see giant growth. He says that based on an assumption of economic growth (GDP) of 5% a year and if African markets continue to follow trends seen elsewhere in terms of their share their economies (GDP) then both turnover (the value of shares traded) and market capitalization (the value of the shares listed on the exchange for trading) could increase many times during the coming decade. Already in the last 10 years Kenya has seen its market capitalization grow 12x, while the market capitalization of the Mauritian market has risen from 30% to 80% of GDP even as the economy has also grown by 5% a year. This has also been seen in other markets, for instance in China where turnover has risen 5x to $2.7 trillion and India where turnover is up from $148 bn to $1.6 trn. African markets could achieve similar growth in the coming years.
Sunil dubs his continent “the final growth frontier of the world” and says it is attracting a lot of interest, despite a slowdown this year due to political upheaval in Tunisia, Egypt and Cote d’Ivoire. As global economic power shifts to China and India, demand for commodities will continue to soar in order to support their growth, and this will continue to boost African economies. In addition, many countries have successfully introduced structural adjustment programmes. There has been huge growth in many African countries and a new and numerous middle class is emerging, likely to push consumption at 10% a year for coming years.
Investors deterred by “anaemic” growth in developed markets are turning to Africa. Despite the prospects, African markets are currently trading at less than 11x trailing Price-Earnings ratio (a measure of valuing a share price compared to last year’s net profits), compared to a trailing PE ratio of 16x in developed markets. This is despite developed markets only growing by 0%-0.5% a year, compared with African growth forecast at least at 5% in most major markets, and more in many countries. Despite delivering double-digit returns and providing some of the world’s top performing markets, even after factoring in risk perceptions “African markets are much cheaper”, says Sunil.
Challenges for macro-economic policy-makers include more improvements in the business climate including further opening of markets, inclusive growth that spreads the benefits to a middle class who will in turn spur consumption and bring large numbers of the population into the forefront of the growth story. He also said the continent needs good, democratic governance, as indicated in North African countries which had been deemed to be success stories until governance problems came to the fore. There also needs to be substantial investment in infrastructure, including roads, railways and airports to link African markets. However, Afridan capital markets could supply the investment funds for this, provided policy-makers understand and actively support the development of security exchanges.
Exchanges also have to play their part. He says they should focus on “the 4Ps: products, players, participants and partnerships”. The markets need new products, they need new players including dramatic increases in the proportion of the local population who trade on capital markets and activity levels by international investors. Top companies – for instance oil companies in Nigeria – may not even be listed and there is plenty of potential to put leading companies onto the radar screen of the international investors. African stock exchanges also need to seek new partnerships with each other. Links between markets in East and Southern Africa are advancing.

How the African Stock Exchanges Association (ASEA) aims to shape the future of African capital markets:
1. Emerge as the organization of reference and choice for investors to obtain first-hand information on African stock markets, increase the visibility of the African markets
2. Revamp the website to give up-to-date information to investors who want to understand the performance of African markets and to become a major source of real-time information, including the changes exchanges are going through.
3. ASEA will work a major index provider to come up with an investigate African index that will be jointly owned and should serve 2 key functions: as a benchmark for investors and to be used as reference for the creation of an African Exchange-Traded Fund. It will track ASEA’s 22 member exchanges, although have not yet decided the weighting of the JSE.
4. ASEA should become mouthpiece of African exchanges with African governments and regional organizations as well as the African Union, the African Development Bank and the World Bank.