Archive for the 'West Africa' 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)

BRVM securities exchange strategy dialogue with US frontier funds

New York, May 12: Sixteen new listings, spurred by privatizations and private equity fund exits, are a key target for Africa’s top-performing securities exchange. The Bourse Régionale des Valeurs Mobilières (BRVM), headquartered in Abidjan, Côte d’Ivoire, is among the world’s most successful integrated regional exchanges, linking eight West African countries (Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo).

In New York this week, 30 US frontier investors, stockbrokers and market specialists joined Mr. Edoh Kossi Amenounve, CEO of BRVM, in a strategic dialogue. Suggestions from the Americans included lower stockbroker commissions, more listings, liquidity, and stepping up listed company reporting to international financial reporting standards (IFRS).

The BRVM has 36 listed bonds and 39 listed companies, and expects four new listings in 2016, following initial public offers (IPOs). In 2015, the BRVM Composite Index rose by 17.77% making it Africa’s top-performing equity index to foreign investors.

Amenounve says: “Most of the economies are not badly affected by the oil price. They are growing through regional linkages. We saw 6.6% GDP growth in our markets in 2015 and expect 7.2% this year. BRVM is different from other markets as our currency, the CFA franc, is pegged to the value of the euro. We offer yield, without the high volatility seen in other African markets.”

The value of trading on the BRVM exchange rose 48% in 2015. Amenounve says local participation is growing even faster: “More and more citizens are becoming shareholders, which is the best way for our people to take ownership of our growth drivers and means of production. In 2012 foreign investors made up 55% of the trading, but the local share had risen to 75% by 2015, of much bigger trading volumes. In 2011, domestic collective investment schemes managed XOF 30bn of assets, but by the end of 2015 that was XOF 600bn, a 20-fold increase.”

Amenounve is leading plans to integrate five West African markets – Nigeria, Ghana, BRVM, Cape Verde and Sierra Leone – by 2020 to form Africa’s second biggest exchange after Johannesburg, with 273 listed companies and 233 brokerage firms. He has been Chairman of the West African Capital Markets Integration Council (WACMIC) since March 2015 and explained the three-step plan for integration:
* Phase 1 is sponsored access for brokerage firms, which was launched in July 2015 and has seen several transactions between Ghana and Nigeria.
* Phase 2 will be a “common passport”, giving a regional stockbroker direct access to any market.
* Phase 3 will be to follow the Euronext model, with a single trading platform and a single order book for all the markets.

The BRVM is Africa’s sixth securities exchange by market capitalization ($12.8 billion for equities and $2.7 billion debt) in 2015. It represents an economic area of more than 100 million consumers, with fast, diversified growth. See more at: www.brvm.org.

The meeting was organized by AZ Media in New York and ourselves, African Growth Partners Ltd.

Edoh Kossi Amenounve, CEO of BRVM exchange

Edoh Kossi Amenounve, CEO of BRVM exchange

Cross-exchange trading between Ghana and Nigeria stock exchanges

A trade in July was one of the first examples of cross-border trading, where a broker in Ghana was able to buy shares on the Nigerian Stock Exchange through links with a Nigerian broker. It points the way for closer capital market integration in West Africa, where economic links are already strong.

According to this story on Bloomberg, the trade was executed by Ghana’s CAL Brokers Ltd and Nigeria’s United Capital Securities Ltd. CAL Brokers bought 100 Dangote Cement and 6,000 Guaranty Trust Bank shares from United Capital Securities. It bought the shares for its own portfolio to sell later, paying commission and money transfer costs.

“Investors can now tap into bigger pool of funds,” Geoffrey Maison, a research analyst at CAL, told Bloomberg in an interview. “Investors from Ghana can look out for opportunities on the Nigerian Stock Exchange or BRVM if they can’t get stocks to buy here.”

Wole Shonibare, Deputy Group CEO/ Managing Director, Investment Banking at United Capital PLC wrote: With signed memoranda of understanding (MOU) (recognized by each regulator in the two jurisdictions) in place, Ghana and Nigerian dealing members (broker-dealers) were able to trade among themselves via Sponsored Access. The first trade which was completed on 15 July 2015 was facilitated by the Nigeria Stock Exchange (NSE), in conjunction with the Ghana Stock Exchange (GSE) with the actual trade conducted by United Capital Securities. This first trade has successfully developed the framework for subsequent trades in the market.

More than 180 securities are listed on the Nigerian bourse, while Ghana Stock Exchange has 35 equities and the Bourse Régionale des Valeurs Mobilières SA or BRVM, a regional stock exchange bringing together eight countries from a base in Abidjan, Cote d’Ivoire, has 39 deals. Ghana and BRVM have been seeing lower trading volumes.

Four West African exchanges including the Sierra Leone stock exchange are busy with a staged integration process under the West African Capital Markets Integration Council (WACMIC), set up in January 2013 to harmonize the regulatory environment for issuing and trading securities and to develop a common platform for cross-border listing and trading. WACMIC is made up of Chief Executives of the regulators (securities commissions) and of the securities exchanges. Adu Anane Antwi, director general of Ghana’s Securities and Exchange Commission told Bloomberg the council had been working on rules and technicalities of cross market trade since 2012.

The current phase is.known as “sponsored access”. Maison said broker can ask a dealer in another country to execute trades on its behalf, Maison said. Previously, an investor wanting to buy equities in another country would have to go through an audit before opening an account with a broker.

Antwi said: “Even at this first stage if you’re interested in a Nigerian stock you don’t have to go to Nigeria to find a broker,” Antwi said. “You can buy the stock by talking to a broker here.”

Next step will be “direct access”. Traders will be able to execute transactions in other markets. The final is a common board to display prices across the 4 markets. This is facilitated as the exchanges have automatic trading and allow direct market access (DMA)

According to United Capital’s Shonibare: This landmark transaction is important and beneficial to West Africa and the African financial markets in many ways. Liberalizing capital transactions across any region is the first step for integrated capital markets. Over the years, African financial markets have been left vulnerable to volatility resulting from massive portfolio inflows from countries that share little economic similarities with the region, causing a significant bout of macroeconomic instability in the domestic financial markets. The Ghana-Nigeria deal is expected to be a precursor to greater capital flows within a sub-region that already operates a liberalized trade environment.

In the near term, market operators intending to participate in this laudable initiative would need to scale up their IT support for trading securities as transactions can only be done electronically while orders would require an order management system that is synchronized with the local Stock Exchange. There is need to provide information about investment opportunities across markets within the region as this will help boost inter-market dealings by investors and assist market operators increase their revenues. Stronger Settlement system is also important. Additionally, there is need for a more robust banking system across markets such that investors can make payments in local currencies where orders are originated irrespective of the market they are trading into as this will help increase the volume/value of trades. Finally, there is urgent need to pass the enabling laws that would allow electronic trading and direct market access to take place in the various exchanges within the region.

Direct market access links West Africa securities exchanges

The framework for linking the capital markets of West Africa was recently published. First step is direct market access (DMA), allowing a stockbroker on one West African exchange to transact directly on the Nigerian market through the order-management system of an approved Nigerian stockbroker.

The Nigerian Stock Exchange has outlined how this would work in its capital market. The initiative is part of a West African Capital Markets Integration (WACMI) programme, aiming to establish a harmonized regulatory environment for issuing and trading securities across West Africa. The overall programme will be rolled out in 3 phases:
Phase 1: Sponsored Access
Phase 2: Direct Access by Qualified West African Brokers
Phase 3: Integrated West African Securities Market.

CEO Oscar Onyema shows top managers of NASDAQ OMX the NSE trading floor. (Credit: businessdayonline)

CEO Oscar Onyema shows top managers of NASDAQ OMX the NSE trading floor. (Credit: businessdayonline)

The first phase will allow brokers in member countries of WACMI to trade securities and settle in markets other than theirs through local brokers in those markets. In Nigeria, this means that stockbrokers that are not registered market operators in Nigeria can participate in the market through remote access to the NSE’s trading facility through a local Dealing Member firm (stockbroker) licensed by the exchange.

This Day newspaper in Nigeria reports that Oscar Onyema, Chairman, West African Capital Markets Integration Council (WACMIC) and CEO of the NSE, said WACMI aims to ensure successful integration of the various stock exchanges in the West African sub region. Achieving integration would enable momentous growth in region’s markets and would attract investment flows, while creating a much larger market for local and international businesses:

“Additionally, integration will enable the movement of capital within the region, creating flexibility for issuers looking to raise capital and investors looking to invest across member states. Furthermore, integration would speed up the development of our various domestic financial systems, promoting increased competition and innovation, as well as offering opportunities for risk diversification.”

Direct market access – the mechanics

The current direct market access programme is only available to NSE dealing member firms with Order Management System (OMS) vendors been certified by the exchange.

Phase 1 is in two sub-phases: Direct market access (DMA) and sponsored access (SA). The current announcements relate to the first, direct market access. This means that a Sponsoring Member firm in Nigeria can allow a Sponsored Participant who operates in a WACMI member country to the NSE’s trading system under the SM’s trading codes via the SM firm’s order management system and using the dealing member firm’s infrastructure.

In order to allow direct market access to a sponsored participant (SP), the sponsoring member (SM) must notify the NSE of the DMA and should get a “no objection” letter. The application process includes giving full address and contact person for the SP and a “Letter of Good Standing” in respect of the sponsored participant (SP) issued by the domestic securities exchange where the SP is an active stockbroking member.

The notification of DMA should also include a copy of the risk policy/framework that the SM plans to use in monitoring the SP’s trading activities. If it later makes any changes to the risk framework it must tell the NSE’s Broker Dealer Regulation department within 1 business day via email or letter format. It will also include the name and registered or business address of the vendor providing the order management system to the sponsoring member (SM).

If the exchange has an “objection” it will advise the sponsoring member of the problems and can ask for more information, before granting the “no objection”.

The sponsoring member will also help the sponsored participant to establish settlement accounts either with a custodian or with the Central Securities Clearing System plc, which has been the clearing and settlement house of the Nigerian capital market and the NSE since 1997. Once this is set up, the SM will also inform the NSE about it.

The second step, sponsored access, will mean that the SP uses the exchange’s infrastructure. It will submit orders to the exchange’s trading system directly, but under a SM firm’s trading codes and without passing through a SM firm’s order management system. Instead, the SP’s orders pass through a series of validation checks carried out by the exchange and the orders are monitored by the SM firm as they happen (in “real-time”).

Sponsoring broker responsibility

According to the notice, issued by Olufemi Shobanjo, Head of Broker Dealer Regulation at the NSE: “It is imperative to emphasise that Dealing Member firms (the Sponsoring Members) will ultimately bear any risks associated with, and will be held liable for any infractions resulting from the Sponsored Participant’s (SP) trading activities. In line with this, The Exchange may request any information from a Dealing Member firm, regarding its trading activity.”

Rencap appoints Yvonne Ike as new CEO West Africa

Leading emerging markets investment bank Renaissance Capital (www.rencap.com) has appointed Yvonne Ike as its Chief Executive Officer, West Africa. She will be based in Lagos.
Clifford Sacks, CEO of Renaissance Capital Africa, says in a press release: “Yvonne is an internationally regarded investment banker credited with pioneering a number of groundbreaking transactions in the West Africa region. The entire team is looking forward to working with Yvonne and benefiting from her local and global expertise.”
She has more than 18 years’ experience in financial services, including capital markets operations and fixed-income, derivatives and equities products. Over the course of her career, she has led senior teams in New York, Geneva, Hong Kong, Nigeria and South Africa.
Her degree is a Bachelor of Science in Economics. She started her career as an auditor with Ernst and Young International and has been an registered representative with the UK’s Financial Services Authority since 1994. Prior to her appointment at Renaissance Capital, Ms Ike was a managing director at JP Morgan, where she spent 15 years until 2009. More recently, she has worked as a partner at Africapital Management Limited, an advisory firm based in Lagos.
She succeeds Rotimi Oyekanmi, who has been appointed Chairman Emeritus, Renaissance Group, West Africa. Oyekanmi joined Renaissance in 2007 and will now be responsible for the build-out of Renaissance’s consumer finance business and help with Renaissance Partners’ land developments in West Africa.
Ms Ike commented: “Renaissance Capital is best placed to provide a broad range of financial solutions to help unlock the massive potential in Africa. I am excited about the firm´s unparalleled vision for Africa, the calibre of the people I will be working with and Renaissance’s execution capabilities. In addition to offering unrivalled financial, investment and management expertise in the West Africa region, we are uniquely positioned for cross-border business between Africa and other regions, particularly in emerging markets.”
Renaissance Capital, part of Renaissance Group, offers access to the emerging markets of Russia, the CIS, Eastern Europe, Asia and Africa through centres such as London, New York and Hong Kong. Its core businesses are: Mergers & Acquisitions; equity and debt capital markets; securities sales and trading; research; and derivatives. It is building practices across emerging markets in metals & mining, oil & gas and agriculture.

Senegal’s $500m Eurobond offers good yield

Senegal has successfully re-priced its yield curve by issuing a more liquid 10-year $500 million Eurobond carrying a coupon of 8.75%. The bond was priced at 97.57 when it was bid on 6 May, the equivalent of a yield of 9.125%. Standard Bank noted it represented a spread of 596 basis points over comparable US Treasuries.
Senegal is rated B+ by Standard & Poors and B1 by Moody’s.
Samir Gadio of Standard Bank Research says the bond attracted a lot of interest, with final demand reaching $2.4 billion. In trading after the issue the mid-price climbed to around 102.75 on 11 May, representing a yield of 8.3% and spread of 508 bps. He adds in an investor note; “further upside is probable as the bond is likely to be included in the EMBI index in late May”.
Stuart Culverhouse of broker Exotix also tips the bond as one to watch: “There are not many places to get 9% yields these days. But we also think it overstates Senegal’s credit risk. We think the offer gives intrinsic value. Moreover, with the new issue likely meeting eligibility criteria for index inclusion (e.g. in the EMBIG) we expect there would be additional technical support for the new bond.
“We think Senegal’s credit fundamentals compare favourably with other B+ rated sovereigns. We think the new bond will offer good value compared to similarly rated peers (eg Ghana and Nigeria) with 200bps-plus upside.”
The bond replaces a $200m 8.75% bond due in 2014 which will be entirely retired. Gadio says the transaction helped significantly reduce Senegal’s credit spread by nearly 100 bps, even as the country extended its yield curve. He says “political risks remain relatively limited ahead of the 2012 general elections”, especially as Senegal’s democratisation process was initiated in the mid-1970s.
Senegal is part of the West African Economic and Monetary Union grouping of 8 West Afrian states formed in 1994, and uses the CFA Franc (XOF) currency linked to the Euro. As a WAEMU country, Senegal cannot independently determine its monetary policy. Gadio says, the Banque Central des Etats de l’Afrique de l’Ouest (regional central bank www.bceao.int) has historically been conservative in its money supply objectives, ensuring a low core inflation and interest rate environment. “The two main economic constraints remain a large current account deficit and a relatively sizeable fiscal deficit, even as public debt is sustainable.”

BRVM bourse comes home from 16 May

West Africa’s Bourse Regionale des Valeurs Mobilieres (www.brvm.org) regional stock exchange is still trading in Bamako this week, but next Monday (16 May) the market will reopen trading operations ino Abidjan, Cote d’Ivoire’s commercial capital. The market had moved operations and started trading in Mali on 1 March because of the violent crisis in Cote d’Ivoire (see our earlier report).
Senior management were already back in Abidjan and banks and stockbrokers were reopening on Monday (9 May) when AfricanCapitalMarketsNews phoned.
According to a report on Bloomberg, Abdelkader N’Diaye information systems director of the BRVM said trading was picking up as situation improved in Abidjan and banks in the city reopened. Former president Laurent Gbagbo was arrested on 11 April and Alessane Ouattara, recognized internationally as winner of last November’s election, was sworn in on 6 May. Forces supporting him had swept through the country in a swift campaign in early April after waiting months for successful international intervention, including from the African Union.
The BRVM smuggled senior management out of Cote’Ivoire in February after security forces loyal to ex-President Laurent Gbagbo occupied the BRVM on 11 February. In an amazing piece of Business Continuity Planning, the BRVM management had all systems including support systems running within 18 days. In March Bloomberg quoted BRVM head Jean-Paul Gillet saying: “We managed to restart the operations of the bourse after we reconstructed the system and the environment. The volume of transactions has been a bit affected, but the prices haven’t dropped as there has been no haste in selling.”
Most banks in Cote d’Ivoire closed about the same time and their branches were taken over. Without the usual custodians and stockbrokers, trading in Mali saw much lower volumes than in Abidjan.
The BRVM lists 39 securities and acts as the regional exchange for 8 countries as an African innovation when it opened in 1998. Sonatel, based in Senegal and including France Telecom as a shareholder, is the biggest listed company with CFA 1.65 trn in market capitalization. Other listings include 8 banks, including SGBCI (Societe Generale SA) and Ecobank Transnational Inc. Ivorian companies make up 33 of the 39 listings, according to BRVM website, and the BRVM Composite Index peaked at 174.89 on 11 Jan, but was 151.46 at close of trading today (13 May) after edging down all week. Michael Barnes, Head of Sales and Trading for Securities Africa said on Monday that much of the pent-up buying and selling had already gone through.

Institutions react to Cote d’Ivoire crisis

Markets are reacting quickly to the news that Laurent Gbagbo was sworn in as president of Cote d’Ivoire on Saturday (4 Dec). The World Bank (www.worldbank.org) and African Development Bank (www.afdb.org) on Sunday said in a joint statement on the crisis: “The African Development Bank and the World Bank, longstanding multilateral development partners of Côte d’Ivoire, view with great concern and frustration the events unfolding in Côte d’Ivoire in the aftermath of the long-awaited elections which were supposed to usher in peace, stability and a basis for improved governance and inclusive growth that reflects participation of all of Côte d’Ivoire.
“We therefore share the serious concerns expressed by the United Nations, the African Union, Economic Community of West African States and other international partners who have supported Côte d’Ivoire’s development efforts.”
The two institutions are reported on Reuters to be reviewing their lending programmes. They provide loans and grants to support programmes fighting poverty. The World Bank has tied the cancellation of $3 billion of Ivory Coast’s external debt, estimated at $12.5 billion, to the elections. Cote d’Ivoire is the world’s top grower of cocoa – the unrest is pushing up prices – and has a popular $2.3 billion Eurobond on which the yield had not moved much before the election but Reuters reports that it is now up to 11.67%, from 10% after the first election round.
Opposition leader, Alassane Ouattara, was named winner of the vote by an Election Commission and the UN endorsed the results showing him gaining the required 10% lead. Then the Constitutional Council over-ruled this after rejecting hundreds of thousands of votes from Northern areas and gave the election to former president Gbagbo.
Both men have declared themselves president and formed governments and the African Union has sent Thabo Mbeki in Abidjan as mediator. Ouattara warned there was a risk of throwing the country back into a north-south conflict which had for decades paralyzed what previously been a promising economy.
The banks said a prolonged crisis in Ivory Coast would plunge more Ivorians deeper into poverty and hurt stability and economic prosperity throughout the region. “We wish to continue working with the people of Côte d’Ivoire in the fight against poverty but it is difficult to do so effectively in an environment of prolonged uncertainty and tension. Accordingly, in line with our policies, we will continue to closely monitor developments and reassess the usefulness and effectiveness of our programs given the breakdown in governance.”
The African Union, the Economic Community of West African States (ECOWAS), the United Nations, the United States, France and the European Union all rejected Gbagbo’s claimed electoral victory.
Australia’s largest gold mining company Newcrest Mining Ltd., based in Melbourne, has suspended operations at its Bonikro mine in Ivory Coast, reported Bloomberg. The mine is near Hire, about 250 kilometres north-west of Abidjan. Newcrest said in a statement to the Australian Stock Exchange that it produces about 120,000 ounces of gold annually. The company said: “Plans are in place to recommence operations as soon as possible,” the company said. “A detailed security plan is in place and includes provision for temporary evacuation of employees should the situation deteriorate.” previous unrest had forced the AfDB to relocate to Tunisia and many international companies to leave.
Newcrest acquired the Bonikro operation as part of the takeover of Lihir Gold Ltd. that completed this year.

African Stock Exchange views – news from ASEA 2009 in Abuja

It has been very difficult to get any news out of the African Stock Exchanges Association (www.africansea.org) conference in Abuja 2009 (Dec 2-4). As far as we can tell, no press releases were put out and neither ASEA secretariat nor the press liaison people from the Nigerian Stock Exchange have been replying to emails.

The following news extracts have been put together from a range of media sources:

West African Exchanges to integrate

Three West African stock exchanges signed an agreement to integrate their markets and to introduce common listing and trading rules, according to a joint statement issued at the ASEA conference. The bourses are Ghana SE, Nigeria SE and the Bourse Regionale des Valeurs Mobilieres, which serves Benin, Burkina Faso, Guinea Bissua, Ivory Coast, Mali, Niger, Senegal and Togo.

Ekow Afedzie, deputy managing director of the Ghana Stock Exchange, reportedly said they had agreed that stockbrokers who meet “certain standards” will acquire a “common passport” that will qualify them to trade on any of the exchanges in the region. Listing and trading rules will be harmonized and legislation will be changed where necessary to pave the way for the integration.

African Index

ASEA plans to create an African stock index in 2010, according to the GSE’s Afedzie. He reportedly said ten countries, including Ghana, Nigeria, Mauritius and Kenya, have signed up to participate. FTSE will compute the index and no decision has yet been taken on which companies will constitute it.

According to Bloomberg, African stock exchanges rank among the worst performers in 2009, although the MSCI Emerging-Markets Index surged 74%. Ghana’s All-Share Index lost 48%, more than any other of 90 primary indexes tracked by Bloomberg. The Nigerian Stock Exchange’s All-Share index is the second-worst performer, declining 36%, while Kenya’s Nairobi All-Share index is sixth-lowest, dropping 5.5%.

Integration and better regulation the answers

Integration of the 28 ASEA stock exchanges to make cross-listing and Africa wide issues easier will assist in capital raising and wooing back foreign investors who pulled out of Africa at the onset of the global crisis. Product diversification could be another tool to boost market liquidity.

Nigeria’s Vice President Goodluck Jonathan reportedly told the conference: “The timing of the crisis has given African capital markets the opportunity to learn from the mistakes of the more advanced markets in the developed world.” He urged the markets to work together to seek “protection from the consequences of the greed and regulatory failure in the more advanced markets”.

He said the crisis offers opportunities to players in African markets who are alert and able to adapt quickly to the changing environment. But he warned that market innovations must be based on economic fundamentals, warning that any irrational exuberance would always come back to haunt nations. Market development and growth must be inclusive and not limited to a select few people and the crisis has clearly demonstrated the critical role of the state in the financial intermediation process and in the maintenance of financial stability through appropriate regulation and supervision.

Acting Director-General of Nigeria’s Securities and Exchange Commission Daisy Ekineh called for retooling and re-orientation for market regulators and operators in the light of the several challenges facing them: “Such challenges as the shallowness of the market and the relatively unsophisticated investing African populace that is vulnerable to misguided investment advice and other malpractices must be addressed.”

Director-General of the Nigerian Stock Exchange Ndi Okereke-Onyiuke urged African Heads of State to make it mandatory for all African countries to establish commodities exchanges through which they can develop their commodities markets.

Zimbabwe Stock Exchange chief executive Mr Emmanuel Munyukwi was reported in local media as saying: “One thing that clearly came out was that there is still appetite for African markets and deliberations were centred on what we should do as the continent to sustain foreign investments.” He said the conference noted tight controls were one of the major impediments to the inflows of foreign funds on African markets.

Delegates examined the challenges faced by African securities exchanges in entrenching strong corporate governance, which was agreed to be more important than financial issues. The participants opted for regulations or compliance of upholding corporate governance ethics, in preference of self-regulation. A representative of the International Finance Corporation reportedly cited the Brazilian Stock Exchange as an example and urged African stock exchanges to adopt similar stringent listing requirements, disclosure mechanisms and high corporate governance standards. While disclosure and transparency were needed, the quality of information published was critical.

Pension funds could boost the growth of African markets and they could have a wider remit to invest in private equity and infrastructure. The size of pension funds could be increased through penetration into the informal sector, which enhances the contributory rate of pension funds.

West Africa private equity fund raises US$200 million

West African private equity fund manager African Capital Alliance (ACA) announced the first closing after raising US$200 million for Capital Alliance Private Equity III (“CAPE III”) fund. The fund targets opportunities in sectors such as financial services, oil and gas, power (electricity) supply, communications, manufacturing and services in Nigeria and the West African sub-region. The aim is to raise a total of $350 million.

Investors in CAPE III include international development finance institutions such as CDC Group, the European Investment Bank, the International Finance Corporation, and Netherlands Development Finance Corporation. Nigeria-based institutional investors including First Trustees Nigeria Plc, AIICO Insurance Plc, Africa Re-insurance Corporation and some high net-worth individuals have also made commitments. CDC Group, an emerging-markets fund of funds backed by the UK Government, announced that it had committed $50m to CAPE III.

CAPE III will seek to acquire significant interests in companies with high growth potential and up to 40% of the fund may be invested in companies in the energy sector.  Economic reforms and liberalization in Nigeria and other West African markets, a scarcity of capital, and relative availability of attractive assets have created unique private equity investment opportunities.

CAPE III is the latest private equity fund sponsored by ACA since its launch in 1997. ACA currently manages over $500 million of aggregate capital including a $170 million real estate fund launched in 2008. Having concluded the first close of CAPE III in May 2009, ACA is targeting a CAPE III final close with aggregate commitments of $350 million. ACA mobilizes long-term capital from institutional investors to promote private sector led investments.