The African Securities Exchanges Association (ASEA) and Oxford Business Group (OBG) have just released a new focus report that examines the efforts being made to integrate the stock markets in the region. These efforts are gaining momentum as key players become more aware of the need to strengthen resilience and diversify the investor base.
The comprehensive report, "African Stock Exchanges," which is accompanied by important data and infographics, offers in-depth analysis of the trends, possibilities, and difficulties seen throughout the continent's financial system, and its capital markets in particular.
The African Exchanges Linkages Project (AELP), which, after a pilot phase involving seven major exchanges, intends to connect stock exchanges regionally and promote both investment and trade, is highlighted in the focus report.
The Korea-Africa Economic Cooperation (KOAFEC) Trust Fund, one of the Bank's bilateral funds, has provided funding for the AELP, a joint project of ASEA and the African Development Bank.
The project is predicted to profit from anticipated increased trade activity under the African Continental Free Trade Area agreement while increasing the depth and liquidity of the region's capital markets.
The paper also examines the technical advancements that have been accomplished in the major exchanges on the continent and are now being copied in significant smaller markets. A major emphasis is placed on the advantages that digital solutions provide, which include making it possible to supply a wider range of goods and services more quickly and affordably.
The report also analyses initiatives being taken at some of the larger markets in the region, in particular to sharpen the focus on environmental, social, and governance reporting. This report also takes into account the impact of rising demand for more sustainable investment products on African exchanges.
The improvement of the regulatory framework, which will be crucial in putting exchanges in a position to play a significant role in assisting the region's economic growth, is another hot topic that is examined.
The report also looks at the difficulties that certain regional exchanges have in trying to grow, problems including low liquidity, few listings, and little involvement from ordinary investors. The study includes inputs from a wide variety of corporate executives as well as 16 case studies that trace the evolution of significant exchanges throughout the continent.
ASEA President and CEO of the Bourse Régionale des Valeurs Mobilières (BRVM) Félix Edoh Kossi Amenounve provides a thorough prologue to the book in which he addresses the actions that must be taken to strengthen the role that the region's capital markets play in Africa's economic development.
According to him, "for the most part, African stock markets continue to be small in terms of size and liquidity, and as a result, they continue to make a negligible contribution to economic growth." "We must provide stock exchanges with more in order to solve the lack of depth in the market to support big operations and to boost interest in African assets," We need to increase the number of firms that are listed on stock markets in order to increase the demand for securities. To do this, we must create institutional savings channels and mobilise people' savings through coordinated initiatives to improve financial literacy.
Karine Loehman, OBG's managing director for Africa, commented following the introduction that while exchanges had been affected by the epidemic, a recovery was now taking form, supported by improvements in their operational models and increasing investor understanding of the region's potential.
According to Loehman, "near-term issues remain a concern, in part as a result of the economic state of specific markets and the impact of foreign headwinds." "However, governments, regulators, and the global business world are increasingly becoming aware of the potential that stock exchanges offer African countries to liberate money and ignite economic growth.
Along with other essential research tools like ESG and Future Readiness reports, articles on country-specific Growth and Recovery Outlooks, and interviews, the focus study on Africa's stock markets is one of a number of customised studies that OBG is presently putting together with its partners.
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