African Stock Exchanges Can Be Catalyst For Development

Two investment analysts have said that African stock markets have the potential to become the next investment frontier but stated that there is need for some radical changes.

The two, Messrs Maged Skawky Sourial, the President of the African Securities Exchange Commission (ASEA) and Neil Harvey, Deputy Chief Executive Officer of the international investment group, Renaissance Capital, made the assertions in two separate interviews.

Mr Harvey said the investment yield from the continent made Africa attractive to foreign investments and fund managers from across the world.

He said over the past years, Renaissance Capital had invested over $500 million and was convinced that more international investment firms were looking at the continent.

“Africa is going to be the next investment frontier in the next 10 to 20 years,” he stated. He said there was the need to ensure good corporate governance that to foster investor confidence and the development of the African market.

For his part, Mr Sourial, who is also the Chairman of the Cairo and Alexandria Stock Exchanges in Egypt, said the continent offered tremendous opportunities for investors, adding that “the African stock markets is at its early growth stages.”

“This means investors who come to the market early stand a good chance of huge returns in the long run,” he added.
He acknowledged that there were a few challenges such as the need to upgrade systems and communications infrastructure to facilitate trade and settlement.

Mr Sourial said communication was key in the stock market to ensure that investors were armed with all the information to enable them to take decisions.

He said assertions that stock exchanges in Africa were small was not a serious concern, explaining that “all stock markets started small and developed along.”

The way forward, Mr Sourial said, was to ensure the integration of the trading platforms of the exchanges by first facilitating the integration policies across the continent to bring in the much needed capital flows.

ASEA was established in 1993 with the principal objective of creating a mutual platform for assistance and co-operation among African capital markets in the areas of technology, corporate governance, economic growth and general market development.

This year's conference, which is being hosted for the first time in Ghana, aims at focusing on important issues affecting African capital markets and how the experiences of various countries could be harnessed to assist in accelerating economic growth.

Apart from the Cairo and Johannesburg stock exchanges which are more than 100 years, most African markets are less than 50 years with small listings hence the liquidity is relatively small.

Story by Boahene Asamoah